English Translation of a Report and Financial Statements Originally Issued in Chinese

MEDIATEK INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS WITH REPORT OF INDEPENDENT ACCOUNTANTS

FOR THE NINE MONTHS THEN ENDED SEPTEMBER 30, 2012 AND 2011

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English Translation of a Report Originally Issued in Chinese

Review Report of Independent Accountants

To the Board of Directors and Shareholders of MediaTek Inc.

We have reviewed the accompanying consolidated balance sheets of MediaTek Inc. and its subsidiaries as of September 30, 2012 and 2011, and the related consolidated statements of income and cash flows for the nine months then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to issue a report based on our reviews.

We conducted our reviews in accordance with the Statements of Auditing Standards No. 36, “Review of Financial Statements” of the Republic of China (R.O.C.). A review is limited primarily to applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the consolidated financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with the requirements of the order VI-0960064020 issued by Financial Supervisory Commission, Executive Yuan, Guidelines Governing the Preparation of Financial Reports by Securities Issuers and accounting principles generally accepted in the R.O.C.

Ernst & Young CERTIFIED PUBLIC ACCOUNTANTS October 29, 2012 Taipei, Taiwan Republic of China

Notice to Readers The reader is advised that these financial statements have been prepared originally in Chinese. In the event of a conflict between these financial statements and the original Chinese version or difference in interpretation between the two versions, the Chinese language financial statements shall prevail.

The accompanying financial statements are intended only to present the financial position and results of operations and cash flows in accordance with accounting principles and practices generally accepted in the R.O.C. and not those of any other jurisdictions. The standards, procedures and practices to review such financial statements are those generally accepted and applied in the R.O.C.

- 2 - WorldReginfo - bb955748-22df-4c84-bf69-2c98116249bb English Translation of Financial Statements Originally Issued in Chinese MEDIATEK INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED BALANCE SHEETS As of September 30, 2012 and 2011 (Amounts in thousands of New Taiwan Dollars)

ASSETS Notes 2012 2011 LIABILITIES AND SHAREHOLDERS' EQUITY Notes 2012 2011 Current assets Current liabilities Cash and cash equivalents 3(1)$ 85,145,850 $ 72,965,343 Short-term loans 3(18)$ 10,504,436 $ 2,317,175 Held-for-trading financial assets-current 3(2) 5,679 137,961 Held-for-trading financial liabilities-current 3(2) 2,063 87,306 Financial assets designated as at fair value through profit or loss-current 3(3) 633,455 1,346,879 Accounts payable 10,844,603 5,627,920 Available-for-sale financial assets-current 3(4) 4,068,994 1,760,756 Payables to related parties 4 1,209,523 1,190,074 Held-to-maturity financial assets-current 3(5) 322,583 - Income tax payable 774,576 702,968 Bond portfolios with no active market-current 3(13) 1,000,000 - Accrued expenses 3(24) 12,326,660 13,160,126 Accounts receivable, net 1, 3(6) 8,216,424 8,383,728 Payables to contractors and equipment suppliers 48,815 - Other receivables 3(7), 4 4,362,381 2,465,780 Other payables 38,916 - Inventories, net 3(8) 12,090,971 7,171,815 Current portion of long-term payables 3(19) 26,408 - Prepayments 1,218,226 2,362,533 Other current liabilities 1,105,625 853,291 Other current assets 522,173 419,101 Deferred income tax liabilities-current 5,027 - Deferred income tax assets-current 255,963 286,306 Total current liabilities 36,886,652 23,938,860 Restricted assets-current 5 20,021 13,222 Total current assets 117,862,720 97,313,424 Long-term liabilities Funds and investments Long-term payables 3(19) 121,769 - Financial assets designated as at fair value through profit or loss-noncurrent 3(9) 1,484,957 2,262,992 Available-for-sale financial assets-noncurrent 3(10) 3,128,063 2,543,994 Held-to-maturity financial assets-noncurrent 3(11) 802,494 254,164 Other liabilities Financial assets carried at cost-noncurrent 3(12) 2,714,857 1,998,261 Accrued pension liabilities 195,622 156,852 Bond portfolios with no active market-noncurrent 3(13) - 1,000,000 Deposits received 4 18,430 5,969 Investments accounted for using the equity method 3(14) 57,691,546 1,764,094 Deferred income tax liabilities-noncurrent 1,098,929 778,845 Prepayments for long-term investments 3(15) - 14,499 Other liabilities-others 70,364 15,711 Total funds and investments 65,821,917 9,838,004 Total other liabilities 1,383,345 957,377 Total liabilities 38,391,766 24,896,237 Property, plant and equipment 3(16) Land 1,273,869 888,722 Buildings and facilities 6,826,756 5,916,978 Shareholders' equity Machinery and equipment 168,410 155,443 Equity attributable to shareholders of the parent Computer and telecommunication equipment 2,086,596 1,795,481 Capital 3(20) Testing equipment 2,877,286 2,622,756 Common stock 13,493,623 10,999,772 Miscellaneous equipment 1,157,423 1,010,761 Capital collected in advance 79 - Total cost 14,390,340 12,390,141 Capital reserve Less : Accumulated depreciation (5,669,123) (4,584,269) Additional paid-in capital in excess of par 3(22) 78,042,950 11,055,025 Add : Construction in progress 1,978,903 1,400,937 Treasury stock transaction 3(22) 1,011,446 941,301 Prepayments for equipment 92,138 97,560 Donated assets 3(22) 1,260 1,260 Property, plant and equipment, net 10,792,258 9,304,369 Long-term investment transaction 3(14), 3(22) 139,006 207,315 Employee stock option 3(22), 3(23) 302,313 271,478 Intangible assets 3(17) Total capital reserve 79,496,975 12,476,379 Trademarks 18,531 - Patents 160,894 158,777 Software 226,332 230,066 Retained earnings Goodwill 14,375,778 6,863,129 Legal reserve 3(21), 3(24) 23,072,429 21,710,122 IPs and others 1,466,736 1,396,989 Special reserve 3(24) 2,210,312 4,198,121 Total intangible assets 16,248,271 8,648,961 Undistributed earnings 3(24) 57,650,681 55,505,983 Other adjustments Other assets Cumulative translation adjustments (4,184,049) (2,065,388) Refundable deposits 225,804 267,192 Unrealized gain (loss) on financial instruments 3(14) 1,134,087 (199,223) Deferred charges 29,082 35,736 Treasury stock 3(25) (55,970) (2,165,884) Deferred income tax assets-noncurrent 257,157 - Total shareholders' equity attributable to parent company 172,818,167 100,459,882 Restricted assets-noncurrent 5 652 730 Minority interests 31,754 52,297 Other assets 3,826 - Total shareholders' equity 172,849,921 100,512,179 Total other assets 516,521 303,658

Total assets $ 211,241,687 $ 125,408,416 Total liabilities and shareholders' equity $ 211,241,687 $ 125,408,416

The accompanying notes are an integral part of these financial statements.

Chairman : Ming-Kai Tsai President : Ching-Jiang Hsieh Chief Financial Officer : David Ku

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Description Notes 2012 2011 Gross sales $ 81,465,589 $ 68,009,198 Less : Sales returns (32,064) (40,297) Sales discounts (8,907,374) (3,744,184) Net sales 3(26), 4 72,526,151 64,224,717 Cost of goods sold 4 (42,562,056) (34,874,146) Gross profits 29,964,095 29,350,571

Operating expenses Selling expenses (2,253,578) (1,875,791) General and administrative expenses (2,241,467) (2,140,671) Research and development expenses (16,509,809) (15,357,360) Total operating expenses (21,004,854) (19,373,822)

Operating income 8,959,241 9,976,749

Non-operating income and gains Interest income 1,327,835 652,020 Gain on equity investments, net 3(14) 405,035 68,976 Gain on disposal of investments 3(14) 691,928 67,671 Foreign exchange gain, net - 269,326 Valuation gain on financial assets 3(2) 75,505 20,375 Others 4 443,715 220,719 Total non-operating income and gains 2,944,018 1,299,087

Non-operating expenses and losses Interest expenses (83,931) (1,925) Loss on disposal of property, plant and equipment (1,884) (15,021) Foreign exchange loss, net (15,315) - Impairment loss 3(4), 3(12) (173,824) - Valuation loss on financial liabilities 3(2) (2,063) (87,306) Others (17,695) (82,661) Total non-operating expenses and losses (294,712) (186,913) Income from continuing operations before income tax 11,608,547 11,088,923 Income tax expense (832,205) (389,659) Consolidated net income $ 10,776,342 $ 10,699,264 Income Attributable to : Shareholders of the parent $ 10,798,322 $ 10,705,568 Minority interests (21,980) (6,304) Consolidated net income $ 10,776,342 $ 10,699,264

Basic Earnings Per Share (in New Taiwan Dollars) 3(27) Before tax After tax Before tax After tax Consolidated net income$ 9.89 $ 9.18 $ 10.16 $ 9.80 Net loss attributable to minority interests 0.02 0.02 0.01 0.01 Net income attributable to the parent $ 9.91 $ 9.20 $ 10.17 $ 9.81

Diluted Earnings Per Share (in New Taiwan Dollars) 3(27) Consolidated net income$ 9.82 $ 9.11 $ 10.05 $ 9.70 Net loss attributable to minority interests 0.02 0.02 0.01 0.01 Net income attributable to the parent $ 9.84 $ 9.13 $ 10.06 $ 9.71

The accompanying notes are an integral part of these financial statements.

Chairman : Ming-Kai Tsai President : Ching-Jiang Hsieh Chief Financial Officer : David Ku

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Description 2012 2011 Cash flows from operating activities : Consolidated net income $ 10,776,342 $ 10,699,264 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 922,043 873,224 Amortization 2,082,574 1,100,419 Bad debt provision 53,380 28,981 Reversal of sales returns and discounts (127,560) - Employee stock options distributed 25,931 57,820 Amortization of financial assets discount or premium 484 1,847 Gain on recovery in market value and obsolescence of inventories (1,300,655) (1,779,055) Net gain on equity investments (405,035) (68,976) Net loss on disposal of property, plant and equipment 1,884 15,021 Net loss on disposal of intangible assets (included in other losses) - 74 Gain on disposal of investments (691,928) (67,671) Valuation (gain) loss on financial assets and liabilities (52,271) 61,800 Loss on impairment of financial assets 173,824 - Cash dividends from equity investees - 166,503 Deferred income tax 220,842 184,853 Employees' bonuses 1,277,867 1,373,306 Changes in operating assets and liabilities: Financial assets designated as at fair value through profit or loss 1,226,294 (1,044,652) Accounts receivable (1,814,486) (3,129,120) Receivables from related parties 23,567 - Other receivables (303,581) 612,911 Inventories (1,390,761) 3,968,868 Prepayments (528,025) (192,573) Other current assets (233,992) 74,187 Accounts payable 2,816,133 (1,761,924) Payables to related parties 276,098 160,914 Income tax payable 92,632 (365,982) Accrued expenses (4,666,770) (3,882,119) Other payables (35,344) - Current portion of long-term payables 8,196 - Other current liabilities 327,884 231,123 Long-term payables (25,893) - Accrued pension liabilities 5,084 49,625 Other liabilities-others 21,013 15,711 Net cash provided by operating activities 8,755,771 7,384,379 Cash flows from investing activities : (Increase) decrease in restricted assets (6,890) 16,435 Increase in available-for-sale financial assets (333,388) (3,426,647) Proceeds from disposal of available-for-sale financial assets 215,992 6,105,726 Increase in held-to-maturity financial assets (322,028) (254,164) Proceeds from disposal of held-to-maturity financial assets 48,126 - Increase in financial assets carried at cost (978,042) (836,842) Proceeds from disposal of financial assets carried at cost 2,312 - Proceeds from disposal of investments accounted for using the equity method 1,528,400 - Increase in investments accounted for using the equity method (255,583) (203,614) Net cash outflows from acquisition of subsidiaries (938,022) - Proceeds from capital reduction of investments accounted for using the equity method 1,467 - Increase in prepayment for long-term investments - (14,499) Purchase of property, plant and equipment (2,038,854) (2,344,694) Proceeds from disposal of property, plant and equipment 1,507 10,358 Decrease (increase) in refundable deposits 39,627 (5,704) Increase in intangible assets and deferred charges (1,156,015) (160,843) Net cash used in investing activities (4,191,391) (1,114,488) Cash flows from financing activities : Increase in short-term loans 6,543,266 2,317,175 Increase in deposits received 12,254 4,996 Proceeds from exercise of employee stock options 1,349 3,364 Cash dividends (10,328,124) (21,999,457) Cash dividends distributed to subsidiaries holding MTK's stock 70,145 155,881 Treasury stock acquired - (2,109,914) Change in minority interests - 54,486 Net cash used in financing activities (3,701,110) (21,573,469) Effect of exchange rate (1,538,858) 2,341,564 Net decrease in cash and cash equivalents (675,588) (12,962,014) Cash and cash equivalents at the beginning of the period 85,821,438 85,927,357 Cash and cash equivalents at the end of the period $ 85,145,850 $ 72,965,343

Supplemental disclosures of cash flow information : Interest paid during the period $ 76,535 $ - Income tax paid during the period $ 497,038 $ 746,503

Activities partially affected cash flows : Purchase of property, plant and equipment $ 2,010,808 $ 2,337,499 Add: decrease in payables to contractors and equipment suppliers 28,046 7,195 Cash paid for the purchase of property, plant and equipment $ 2,038,854 $ 2,344,694

Non-cash activities : Change in unrealized gain (loss) on financial instruments $ 1,090,895 $ (381,831) Adjustment of shareholders' equity from disposal of investments accounted for using the equity method $ (86,357) $ - Available-for-sale financial assets reclassified from investments accounted for using the equity method $ 560,270 $ - Purchase investment by issuing new shares $ 56,898,535 $ -

The accompanying notes are an integral part of these financial statements.

Chairman : Ming-Kai Tsai President : Ching-Jiang Hsieh Chief Financial Officer : David Ku

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MediaTek Inc. (“MTK”) has prepared the notes in conformity with the order VI-0960064020 issued by Financial Supervisory Commission, Executive Yuan, which simplifies the disclosure requirement. According to this order, MTK is only required to disclose the differences of accounting policies between the latest annual audited consolidated financial statements and the current ones and to disclose the consolidated entities. The following items can be exempt from disclosures: i. History and organization; ii. Income tax; iii. Pension plan; iv. Summary of operation cost and expenses including salary, depreciation, and amortization; and v. Attachments pertaining to significant transactions, investments, and investments in Mainland China.

1. Summary of Significant Accounting Policies The accompanying consolidated financial statements are prepared in accordance with the requirements of the order VI-0960064020 issued by Financial Supervisory Commission, Executive Yuan, Guidelines Governing the Preparation of Financial Reports by Securities Issuers, and accounting principles generally accepted in the R.O.C. Significant accounting policies are summarized as follows:

Significant accounting policies adopted in preparing the accompanying consolidated financial statements are those adopted in preparing the latest annual consolidated financial statements, except those stated below:

General Descriptions of the Consolidated Entities The accompanying consolidated financial statements include the accounts of MTK, all directly or indirectly majority-owned subsidiaries by MTK and those investees in which the MTK’s ownership percentage is less than 50% but MTK has a controlling interest. The consolidated subsidiaries are listed as follows: Percentage of Ownership As of September 30, Company Main Business 2012 2011 Note MediaTek Investment Corp. General investing 100.00% 100.00% - Hsu-Ta Investment Corp. General investing 100.00% 100.00% 1 Hsu-Chia Investment Limited General investing - 100.00% 1 Hsu-Kang Investment Limited General investing - 100.00% 1 Core Tech Resources Inc. General investing 100.00% 100.00% - MediaTek Capital Corp. General investing 100.00% 100.00% - RollTech Technology, Co. Ltd. Software development 100.00% 100.00% - E-vehicle Semiconductor Technology Co. Ltd. Research, manufacturing and sales 68.97% 68.97% 2 E-vehicle Holding Corp. General investing 100.00% - 3 (To be continued)

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(Continued) Percentage of Ownership

As of September 30, Company Main Business 2012 2011 Note E-vehicle Investment Limited General investing 100.00% - 4 E-vehicle Semiconductor (Shanghai) Co., Ltd. Research, manufacturing and sales 100.00% - 5 Gaintech Co. Limited General investing 100.00% 100.00% - MediaTek China Limited General investing 100.00% 100.00% - MediaTek (Hefei) Inc. Technology services 100.00% 100.00% - MediaTek (Beijing) Inc. Technology services 100.00% 100.00% - MediaTek (Shenzhen) Inc. Technology services 100.00% 100.00% - MediaTek (Chengdu) Inc. Technology services 100.00% 100.00% - MediaTek (Wuhan) Inc. Technology services 100.00% 100.00% - MediaTek (Shanghai) Inc. Technology services 100.00% 100.00% 6 MediaTek Singapore Pte. Ltd. Research, manufacturing and sales 100.00% 100.00% - MTK Wireless Limited (UK) Research 100.00% 100.00% 7 MediaTek Wireless Limited (Ireland) Research 100.00% 100.00% - MediaTek Denmark ApS Research 100.00% 100.00% 7 MTK Wireless L.L.C. (Dubai) Technology services 100.00% 100.00% - MediaTek USA Inc. Research 100.00% 100.00% 8 MediaTek Wireless, Inc. (USA) Research 100.00% 100.00% - MediaTek Japan Inc. Technology services 100.00% 100.00% - MediaTek India Technology Pvt. Ltd. Research 100.00% 100.00% - MediaTek Korea Inc. Technology services 100.00% 100.00% - Vogins Technology Co., Ltd. General investing 79.51% 79.51% - Vogins Technology (Shanghai) Co., Ltd. Software development 100.00% 100.00% - Hesine Technologies International Worldwide Inc. General investing 100.00% 100.00% - Hesine Technologies, Inc. Technology services 100.00% 100.00% 9 Gold Rich International (Samoa) Limited General investing 100.00% 100.00% 10 Smarthead Limited General investing 100.00% 100.00% 11 Gold Rich International (HK) Limited General investing 100.00% 100.00% 12 Lepower Limited General investing 71.09% 71.09% 13 Lepower (HK) Limited General investing 100.00% 100.00% 14 Lepower Technologies (Beijing) Inc. Research, manufacturing and sales 100.00% - 15 Ralink Technology Corp. Research, manufacturing and sales 100.00% - 16 Ralink Technology (Singapore) Corp. Pte. Ltd. General investing - - 16&17 T-Rich Technology (Cayman) Corp. General investing 100.00% - 16 T-Rich Technology Corp. Research, manufacturing and sales 100.00% - 16 Ralink Technology (Samoa) Corp. General investing 100.00% - 16 Ralink Technology Corporation (USA) Research 100.00% - 8&16 Shadow Investment Limited General investing 100.00% - 16 (To be continued)

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(Continued) Percentage of Ownership

As of September 30, Company Main Business 2012 2011 Note MediaTek (Suzhou) Inc. Technology services 100.00% - 16 MediaTek (Nanjing) Inc. Technology services 100.00% - 16 MediaTek Sweden AB Research 100.00% - 18

1. Hsu-Chia Investment Limited and Hsu-Kang Investment Limited were merged into Hsu-Ta Investment Limited on September 30, 2012. In addition, Hsu-Ta Investment Limited was reincorporated as a company limited by shares. 2. MediaTek Capital Corp. acquired E-vehicle Semiconductor Technology Co. Ltd. in May 2011. 3. E-vehicle Semiconductor Technology Co. Ltd. established E-vehicle Holding Corp. in September 2012. 4. E-vehicle Holding Corp. established E-vehicle Investment Limited in September 2012. 5. E-vehicle Investment Limited established E-vehicle Semiconductor (Shanghai) Co., Ltd. in September 2012. 6. MediaTek China Limited established MediaTek (Shanghai) Inc. in January 2011. 7. Gaintech Co. Limited acquired 100% shares of MTK Wireless Limited (UK) and MediaTek Denmark ApS from MediaTek Singapore Pte. Ltd. in August 2012. 8. MediaTek USA Inc. issued new shares to acquire 100% shares of Ralink Technology Corporation’s subsidiary - Ralink Technology Corporation (USA) in October 2011. 9. Hesine Technologies International Worldwide Inc. invested in Hesine Technologies, Inc. in July 2011. 10. Gaintech Co. Limited established Gold Rich International (Samoa) Limited in May 2011. 11. Gaintech Co. Limited established Smarthead Limited in June 2011. 12. Gold Rich International (Samoa) Limited established Gold Rich International (HK) Limited in May 2011. 13. Gaintech Co. Limited established Lepower Limited in July 2011. 14. Lepower Limited established Lepower (HK) Limited in July 2011. 15. Lepower (HK) Limited established Lepower Technologies (Beijing) Inc. in February 2012. 16. MTK issued new shares to exchange 100% shares of Ralink Technology Corp. in October 2011 and acquired all its subsidiaries: T-Rich Technology (Cayman) Corp., T-Rich Technology Corp., Ralink Technology (Singapore) Corp. Pte. Ltd, Ralink Technology Corporation (USA), Ralink Technology (Samoa) Corp., Shadow Investment Limited, MediaTek (Suzhou) Inc., and MediaTek (Nanjing) Inc. The record date of shares exchange was set on October 1, 2011, and accordingly Ralink Technology Corp. and its subsidiaries were included in MTK’s 2011 consolidated financial statements. After the acquisition, the Company conducted a group reorganization by attaching Ralink Technology (Samoa) Corp., Shadow Investment Limited, MediaTek (Suzhou) Inc. and MediaTek (Nanjing) Inc. to Gaintech Co. Limited as its subsidiaries. 17. Ralink Technology (Singapore) Corp. Pte. Ltd. has been entered process of liquidation from July 2012. 18. Gaintech Co. Limited acquired 100% shares of MediaTek Sweden AB in April 2012.

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The following diagram presented information regarding the relationships and ownership percentages among MTK and subsidiaries as of September 30, 2012:

MTK

MediaTek Ralink Hsu-Ta Investment Technology Investment Corp. Corp. Corp. 100.00% 100.00% 100.00%

MediaTek Gaintech Co. Core Tech MediaTek T-Rich Capital Co. Limited Resources USA Inc. Technology 100.00% Inc. 100.00% 10.57% (Cayman) Corp. 100.00% 100.00% E-vehicle RollTech MediaTek Semiconductor Technology, T-Rich India Technology Co. Ltd. Technology Technology, Co. Ltd. 100.00% Corp. Pvt. Ltd. 68.97% 100.00% 0.01%

Lepower MediaTek MediaTek MediaTek Shadow E-vehicle MediaTek MediaTek MediaTek Smarthead MTK Ralink Gold Rich MediaTek MediaTek Hesine Vogins Technologies Limited USA Inc. Sweden Denmark Investment Holding China India Japan Limited Wireless Technology International Singapore Korea Inc. Technology International 71.09% 89.43% AB ApS Limited Corp. Limited Technology, Inc. 100.00% Limited (Samoa) (Samoa) Pte. Ltd. 100.00% Co. Ltd. Worldwide

79.51% 100.00% 100.00% 100.00% Limited 100.00% 100.00% Pvt. Ltd. 100.00% (UK) Corp. 100.00% Inc.

100.00% 99.99% 100.00% 100.00% 100.00%

MediaTek MediaTek E-vehicle MediaTek MediaTek MediaTek MediaTek MediaTek MediaTek Gold Rich MediaTek MediaTek Hesine Vogins Lepower Ralink MediaTek Technologies, Wireless, (Suzhou) Investment (Chengdu) (Hefei) (Shenzhen) (Beijing) (Wuhan) (Shanghai) International Wireless Wireless Technology (HK) Technology (Nanjing) Inc. Inc. Inc. Inc. Inc. (HK) L.L.C. Limited (Shanghai) Limited Inc. Corporation Inc. Inc. Limited Inc. Inc. 100.00% 100.00% 100.00% 100.00% Limited (Dubai) (Ireland) Co., Ltd. 100.00% (USA) (USA) 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

E-vehicle Lepower Semiconductor Technologies (Shanghai) (Beijing) Inc Co., Ltd. 100.00% 100.00% - 9 - WorldReginfo - bb955748-22df-4c84-bf69-2c98116249bb English Translation of Financial Statements Originally Issued in Chinese MEDIATEK INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

Principles of Consolidation A. The consolidated financial statements were prepared in accordance with SFAS No. 7. The transactions between the consolidated entities were appropriately eliminated in the consolidated financial statements.

B. Investees in which MTK and subsidiaries hold more than 50% of voting rights, including those that are exercisable or convertible, are accounted for using the equity method and shall be consolidated, since MTK and subsidiaries are considered to possess control. An entity shall also be consolidated if any of the following circumstances exists:

a. The total amount of voting rights held by the investee exceeds 50% due to agreement with other investors; b. As permitted by law, or by contract agreements, MTK controls an entity’s finances, operations and personnel affairs; c. MTK has authority to appoint or discharge more than half members of board of directors (or equivalents), by whom the investee is controlled; d. MTK leads and controls more than half of the members of the board of directors (or equivalents), by whom the investee is controlled; e. Other indications of control possession.

C. If the acquisition cost is greater or less than the proportionate book value of the investee, it is accounted for in accordance with the R.O.C. SFAS No. 25, “Business Combinations - Accounting Treatment under Purchased Method”. Effective from January 1, 2006, pursuant to the newly revised SFAS No. 25, investment premiums, representing goodwill, are no longer amortized, and are assessed for impairment at least on an annual basis; while investment discounts continue to be amortized over the remaining period. In some cases, the fair value will exceed the investment cost. That excess generated after December 31, 2005 shall be allocated as a pro rata reduction of the amounts that otherwise would have been assigned to all of the acquired noncurrent assets. If any excess remains after reducing to zero the amounts that otherwise would have been assigned to those assets, that remaining excess shall be recognized as an extraordinary gain.

D. MTK together with its subsidiaries above mentioned are hereinafter referred to collectively as the “Company”. Minority interests in the above mentioned subsidiaries are presented as a separate component of shareholders’ equity.

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Evaluation of Impairment of Accounts Receivable The Company first assesses whether objective evidence of impairment exists for notes and accounts receivable that are individually significant. If there is objective evidence that an impairment loss has occurred, the amount of impairment loss is assessed individually. For notes and accounts receivable other than those mentioned above, the Company groups those assets with financial assets with similar credit risk characteristics and collectively assess them for impairment.

2. Reasons and Effects for Change in Accounting Principles (1) Effective January 1, 2011, the Company adopted the third revised R.O.C. SFAS No. 34, “Financial Instruments: Recognition and Measurement”. This change in accounting principles had no significant effect on net income and earnings per share for the nine months ended September 30, 2011.

(2) Effective January 1, 2011, the Company adopted R.O.C. SFAS No. 41, “Operating Segments”, to present operating segment information. The newly issued R.O.C. SFAS No. 41 replaced R.O.C. SFAS No. 20, “Segment Reporting”.

3. Contents of Significant Accounts (1) Cash and Cash Equivalents As of September 30, 2012 2011 Petty cash $1,607 $1,254 Savings and checking accounts 14,004,983 8,597,172 Time deposits 71,089,232 64,366,917 Cash equivalents-bonds-Repo 50,028 - Total $85,145,850 $72,965,343

a. As of September 30, 2012, the Company was committed to selling the bonds-Repo back to the brokers in October 2012.

b. Cash and cash equivalents were not pledged as of September 30, 2012 and 2011.

(2) Held-for-trading Financial Assets and Liabilities-Current a. As of September 30, 2012 2011 Held-for-trading financial assets-Current Forward exchange contracts $5,679 $323 Cross currency swap contracts - 137,638 Total $5,679 $137,961

- 11 - WorldReginfo - bb955748-22df-4c84-bf69-2c98116249bb English Translation of Financial Statements Originally Issued in Chinese MEDIATEK INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

As of September 30, b. 2012 2011 Held-for-trading financial liabilities-Current Forward exchange contracts $2,063 $87,306

(a) The Company entered into derivative contracts during the nine months ended September 30, 2012 and 2011 to manage exposures to foreign exchange rate changes. The derivative contracts entered into by the Company did not meet the criteria of hedge accounting prescribed by SFAS No. 34. Therefore, they were recorded as the held-for-trading financial assets and liabilities-current. Please refer to Note 9 to the financial statements for the disclosure of relative risk information.

Outstanding forward exchange contracts as of September 30, 2012 and 2011 were as follows:

(i) As of September 30, 2012: Held-for-trading financial assets Contract amount Financial instruments Type Maturity (US$’000) Forward exchange contracts Sell USD October 2012 62,000

Held-for-trading financial liabilities Contract amount Financial instruments Type Maturity (US$’000) Forward exchange contracts Sell USD October 2012 20,000

(ii) As of September 30, 2011: Held-for-trading financial assets Contract amount Financial instruments Type Maturity (US$’000) Forward exchange contracts Sell USD October 2011 10,000

Held-for-trading financial liabilities Contract amount Financial Instruments Type Maturity (US$’000) Forward exchange contracts Sell USD October- 100,000 November 2011

For the nine months ended September 30, 2012 and 2011, gain (loss) arising from the forward exchange contracts were NT$24,723 thousand and NT$(138,385) thousand, respectively.

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(b) Outstanding cross currency swap contracts as of September 30, 2012 and 2011 were as follows:

(i) As of September 30, 2012: None

(ii) As of September 30, 2011: Held-for-trading financial assets: Contract amount Range of interest Range of interest Financial Instruments Maturity (US$’000) rate paid rate received Cross currency swap contracts November 2011 75,000 -% 3.80%~3.95%

For the nine months ended September 30, 2012 and 2011, gains arising from the cross currency swap contracts were nil and NT$137,638 thousand, respectively.

(3) Financial Assets Designated as at Fair Value through Profit or Loss-Current As of September 30, 2012 2011 Convertible bonds $- $103,299 Bonds - 306,640 Credit-linked deposits 281,585 - Interest rate-linked deposits 351,870 936,940 Total $633,455 $1,346,879

Convertible bonds, bonds, credit-linked and interest rate-linked deposits are hybrid financial instruments. Since it is impractical to measure the fair value of the embedded derivative separately either at acquisition or at a subsequent financial reporting date, the entire hybrid instruments were designated as financial instruments at fair value through profit or loss. Please refer to Note 9 to the financial statements for the disclosures of relative risk information.

(4) Available-for-sale Financial Assets-Current As of September 30, 2012 2011 Funds $2,570,093 $1,597,184 Bonds 81,614 118,030 Depositary receipts (Note) 30,917 45,542 Common shares 1,386,370 - Total $4,068,994 $1,760,756

Note: The Company recognized an impairment loss of NT$84,998 thousand for the nine months ended September 30, 2012 due to a prolonged market value decline.

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(5) Held-to-Maturity Financial Assets-Current As of September 30, 2012 2011 Bonds $58,505 $- Structured deposits 264,078 - $322,583 $-

(6) Accounts Receivable-Net As of September 30, 2012 2011 Accounts receivable $8,704,804 $8,707,516 Less: Allowance for sales returns and discounts (190,571) - Allowance for doubtful accounts (297,809) (323,788) Net $8,216,424 $8,383,728

The Company entered into several factoring agreements without recourse with financial institutions. According to those agreements, the Company does not take the risk of uncollectible accounts receivable, but only the risk of loss due to commercial disputes. The Company did not provide any collateral, and the factoring agreements met the criteria of financial asset derecognition. The Company derecognized related accounts receivable after deducting the estimated value of commercial disputes. The Company has not withdrawn cash entitled by the factoring agreements from banks as of September 30, 2012 and 2011. Receivables from banks due to factoring agreement were NT$3,168,779 thousand and NT$1,903,860 thousand, respectively.

As of September 30, 2012 and 2011, accounts receivable derecognized were as follows:

As of September 30, 2012: Accounts receivable Cash The Factor Interest derecognized withdrawn Unutilized Credit line (Transferee) rate (US$’000) (US$’000) (US$’000) (US$’000) Taishin International Bank - 55,020 - 55,020 136,517 BNP Paribas - 52,975 - 52,975 80,000 107,995 - 107,995 216,517

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As of September 30, 2011: Accounts receivable Cash The Factor Interest derecognized withdrawn Unutilized Credit line (Transferee) rate (US$’000) (US$’000) (US$’000) (US$’000) Taishin International Bank - 37,800 - 37,800 115,310 HSBC Bank - 24,745 - 24,745 95,000 62,545 - 62,545 210,310

(7) Other Receivables As of September 30, 2012 2011 Interest receivable $446,532 $190,030 VAT refundable 711,915 316,799 Others 3,203,934 1,958,951 Total $4,362,381 $2,465,780

As of September 30, 2012 and 2011, receivables from banks due to factoring agreement were NT$3,168,779 thousand and NT$1,903,860 thousand, respectively. Please refer to Note 3(6).

(8) Inventories-Net As of September 30, 2012 2011 Materials $2,892 $- Work in process 9,964,982 5,703,580 Finished goods 4,344,161 4,042,241 Subtotal 14,312,035 9,745,821 Less: Allowance for loss on decline in market value and obsolescence (2,221,064) (2,574,006) Net $12,090,971 $7,171,815 a. As of September 30, 2012 and 2011, the circumstances that caused the net realizable value of inventory to be lower than its cost no longer existed. As a result, the Company recognized a reversal gain, which was included in cost of goods sold, in the amount of NT$1,300,655 thousand and NT$1,779,055 thousand for the nine months ended September 30, 2012 and 2011, respectively.

b. Inventories were not pledged as of September 30, 2012 and 2011.

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(9) Financial Assets Designated as at Fair Value through Profit or Loss-Noncurrent As of September 30, 2012 2011 Bonds $- $117,125 Interest rate-linked deposits 530,004 1,397,642 Credit-linked deposits 543,086 521,118 Exchange rate-linked deposits 411,867 227,107 Total $1,484,957 $2,262,992

(10) Available-for-sale Financial Assets-Noncurrent As of September 30, 2012 2011 Funds $2,385,872 $1,836,598 Bonds 742,191 607,392 Securities - 100,004 Total $3,128,063 $2,543,994

(11) Held-to-maturity Financial Assets-Noncurrent As of September 30, 2012 2011 Bonds $244,996 $254,164 Interest rate-linked deposits 557,498 - Total $802,494 $254,164

(12) Financial Assets Carried at Cost-Noncurrent As of September 30, 2012 2011 Non-publicly traded stocks (Note) $1,522,190 $1,369,522 Capitals 1,192,667 628,739 Total $2,714,857 $1,998,261

During the first nine months of 2012, the Company increased its investment in Shenzhen Goodix Technology Ltd. by NT$55,761 thousand and acquired the significant influence over the investee. Therefore, the Company reclassified the investment from financial assets carried at cost to investments accounted for using the equity method in the aggregate amount of NT$114,445 thousand. Please refer to Note 3(14).

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The common shares of China Mobile Games and Entertainment Group Limited have been listed on the NASDAQ since September 2012. Therefore, the Company reclassified the investment from financial assets carried at cost to available-for-sale financial assets-current in the amount of NT$205,394 thousand.

Note: The Company recognized an impairment loss of NT$88,826 thousand for the nine months ended September 30, 2012 due to a prolonged market value decline.

(13) Bond Portfolios with No Active Market

As of September 30, 2012 2011 Series B preferred stock $1,000,000 $1,000,000 Less: Current portion (1,000,000) - Total $- $1,000,000

In December 2005, the Company acquired series B preferred stocks (“Preferred B”) of Chinatrust Financial Holding Company by NT$1,000,000 thousand. Terms and conditions of the stock are listed as follows: a. Duration：7 years b. Par value：$10 per share c. Issuing price：$40 per share d. Dividends: Dividend is at 3.5% per year based on actual issuing price and is paid in cash annually and in arrears. e. Redemption at maturity: Preferred B is a 7-year preferred stock. Redemption price at maturity is at 100% of the issuing price, i.e. NT$40 per share.

(14) Investments Accounted for Using the Equity Method a. As of September 30, 2012 Investee Company Type Share/unit Amount Ownership MStar Semiconductor, Inc. Common share 254,115,685 $57,092,495 48.00% Airoha Technology, Inc. Common share 13,391,734 227,072 38.81% Shenzhen Goodix Technology Ltd. Common share 17,806,125 168,586 23.74% Others 203,393 Total $57,691,546

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As of September 30, 2011 Investee Company Type Share/unit Amount Ownership ALi Corporation Common share 64,099,738 $1,358,176 21.09% Airoha Technology, Inc. Common share 13,391,734 206,397 38.99% Others 199,521 Total $1,764,094

b. For the nine months ended September 30, 2012 and 2011, the Company recognized an investment gain accounted for using the equity method in the amount of NT$405,035 thousand and NT$68,976 thousand, respectively.

c. For the nine months ended September 30, 2012, the Company invested Shenzhen Goodix Technology Ltd. which was reclassified from financial assets carried at cost-noncurrent in the amount of NT$114,445 thousand.

d. In May 2012, the Company sold shares of ALi Corporation at the price of NT$1,528,400 thousand, resulting in an investment disposal gain of NT$684,785 thousand and a reduction of capital reserve of NT$86,357 thousand. As the Company had lost its significant influence over ALi Corporation, the Company reclassified the remaining shares to available-for-sale financial assets-current.

e. In 2012, the Company totally acquired 254,115,685 shares (48% of MStar’s outstanding shares) of MStar Semiconductor, Inc. through a tender offer. The price of the tender offer was 1 MStar share in exchange for 0.794 share of the Company’s common stock plus NT$1 in cash. The Company aggregately issued 201,767,854 new shares and paid NT$254,116 thousand in cash for this tender offer.

f. Investments mentioned above were not pledged as of September 30, 2012 and 2011.

(15) Capital collected in advance

As of September 30, 2012 2011 Momagic Technologies Private Limited $- $14,499

(16) Property, Plant and Equipment a. No interest was capitalized for the nine months ended September 30, 2012 and 2011.

b. Property, plant and equipment were not pledged as of September 30, 2012 and 2011.

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(17) Intangible Assets For the nine months ended September 30, 2012 Patents, IPs

Trademarks Software and Others Total Original cost Balance at beginning of period $32,300 $892,000 $6,670,723 $7,595,023 Increase - separately acquired - 89,618 1,081,135 1,170,753 Increase - through business combination - - 23,627 23,627 Elimination and others 685 25,557 11,071 37,313 Balance at end of period 32,985 1,007,175 7,786,556 8,826,716 Accumulated amortization Balance at beginning of period (4,852) (612,576) (4,255,323) (4,872,751) Increase - amortization (9,602) (168,355) (1,903,515) (2,081,472) Elimination and others - 88 (88) - Balance at end of period (14,454) (780,843) (6,158,926) (6,954,223) Net $18,531 $226,332 $1,627,630$1,872,493

For the nine months ended September 30, 2011 Patents, IPs and

Software Others Total Original cost Balance at beginning of period $2,712,581 $9,034,111 $11,746,692 Increase - separately acquired 115,108 52,266 167,374 Elimination and others (2,051,401) (3,652,866) (5,704,267) Balance at end of period 776,288 5,433,511 6,209,799 Accumulated amortization Balance at beginning of period (2,379,528) (6,657,958) (9,037,486) Increase - amortization (215,211) (885,208) (1,100,419) Elimination and others 2,048,517 3,665,421 5,713,938 Balance at end of period (546,222) (3,877,745) (4,423,967) Net $230,066 $1,555,766 $1,785,832

(18) Short-Term Loans As of September 30, 2012 2011 Unsecured bank loans $10,504,436 $2,317,175

The interest rate of the unsecured loans as of September 30, 2012 and 2011 were between 0.95~1.25% and 0.84%.

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(19) Long-Term Payables As of September 30, Item Period 2012 2011 Installment Payment Royalty payables January 2011- Repayable in 24 December 2016 $148,177 $- quarterly installments. Less: Current portion (26,408) - Net $121,769 $-

a. The royalty payables was for Ralink Technology Corporation’s use of patent.

b. The Company did not provide collateral for the above payables.

(20) Common Stock As of January 1, 2011, the authorized and issued common shares of MTK amounted to NT$12,000,000 thousand and NT$10,999,317 thousand, divided into 1,200,000,000 shares (including 20,000,000 shares reserved for exercise of employee stock options) and 1,099,931,683 shares, respectively, each share at par value of NT$10. In addition, capital collected in advance in the amount of NT$365 thousand, divided into 36,501 shares, were issued and registered during the year of 2011.

Based on the resolution of shareholders’ general meeting on June 15, 2011, MTK resolved to issue new shares to exchange 100% shares of Ralink Technology Corp. MTK issued 55,533,588 new shares according to the business combination agreement, each share at par value of NT$10. The record date of shares exchange was set on October 1, 2011, and the government approval has been successfully obtained.

On October 28, 2011, MTK retired 8,000,000 shares of treasury stock which were purchased during the period from July 14, 2011 to September 12, 2011 for the shareholders’ interest. The government approval has been successfully obtained.

In 2011, MTK issued and registered 17,339 new shares at par value of NT$10 for the employee stock options exercised.

Based on the resolution of shareholders’ general meeting on June 13, 2012, MTK resolved to increase authorized shares of MTK amounted to NT$20,000,000 thousand, divided into 2,000,000,000 shares (including 20,000,000 shares reserved for exercise of employee stock options), each share at par value of NT$10. The government approval has been successfully obtained.

- 20 - WorldReginfo - bb955748-22df-4c84-bf69-2c98116249bb English Translation of Financial Statements Originally Issued in Chinese MEDIATEK INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

The board of directors has approved a tender offer to acquire shares of MStar Semiconductor, Inc. (“MStar”) on June 22, 2012. MTK totally issued 201,767,854 new shares at par value of NT$10 to acquire 48% shares of MStar. The government approval has been successfully obtained.

For the nine months ended September 30, 2012, MTK issued 83,224 new shares at par value of NT$10 for the employee stock options exercised. Among those new shares, 7,893 shares (NT$79 thousand in the amount) were not yet registered and therefore were classified as capital collected in advance.

As of September 30, 2012, the authorized and issued common shares of MTK amounted to NT$20,000,000 thousand and NT$13,493,623 thousand, divided into 2,000,000,000 shares (including 20,000,000 shares reserved for exercise of employee stock options) and 1,349,362,296 shares, respectively, each share at par value of NT$10. Capital collected in advance was NT$79 thousand.

(21) Legal Reserve According to the amendment of R.O.C. Company Law, effective on January 4, 2012, 10% of MTK’s net income after tax shall be appropriated to legal reserve prior to any distribution. Where such legal reserve amounts to the total authorized capital, this provision shall not apply. Where a company incurs no loss, it may distribute its legal reserve by issuing new shares to its original shareholders’ in proportion to the number of shares being held by each of them or by cash. Where legal reserve is distributed by issuing new shares or by cash, only the portion of legal reserve which exceeds 25% of the paid-in capital may be distributed.

(22) Capital Reserve As of September 30, 2012 2011 Additional paid-in capital $78,042,950 $11,055,025 Treasury stock transaction 1,011,446 941,301 Donated assets 1,260 1,260 Long-term investment transaction 139,006 207,315 Employee stock option 302,313 271,478 Total $79,496,975 $12,476,379

According to R.O.C. Company Law, capital reserve cannot be used for distributing cash. However, according to the amendment of R.O.C. Company Law, effective on January 4, 2012, the capital reserve generated from excess of the issuance price over the par value of capital stock (including the stock issued for mergers and the reserve from treasury stock transactions) and donations can be used to distribute cash. MTK shall not use capital reserve to make up its loss unless legal reserve is insufficient for making up such losses. Capital reserve can be used to distribute stock dividends. However, each distribution is subject to a legal limitation.

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(23) Employee Stock Options a. In December 2007, July 2009, May 2010, August 2011 and August 2012, MTK was authorized by the Financial Supervisory Commission, Executive Yuan, to issue employee stock options with a total number of 5,000,000 units, 3,000,000 units, 3,500,000 units, 3,500,000 and 3,500,000 units, each option eligible to subscribe for one common share. The options may be granted to qualified employees of MTK or any of its domestic or foreign subsidiaries, in which MTK’s shareholding with voting rights, directly or indirectly, is more than fifty percent. The options are valid for ten years and exercisable at certain percentage subsequent to the second anniversary of the granted date. Under the terms of the plan, the options are granted at an exercise price equal to the closing price of MTK’s common share listed on the TWSE on the grant date.

Detailed information relevant to the employee stock options is disclosed as follows: Total number of Total number of Shares available for Exercise price Date of grant options granted options outstanding option holders (NTD) (Note) 2008.03.31 1,134,119 459,407 459,407 $358.0 2008.08.28 1,640,285 750,233 750,233 344.5 2009.08.18 1,382,630 742,600 742,600 431.0 2010.08.27 1,605,757 966,341 966,341 404.8 2010.11.04 65,839 17,714 17,714 377.0 2011.08.24 2,109,871 1,843,550 1,843,550 277.4 2012.08.14 1,346,795 1,328,169 1,328,169 286.8 Note: The exercise prices have been adjusted to reflect the change of outstanding shares (i.e. the share issued for cash or the appropriations of earnings) in accordance with the plan.

The compensation cost was recognized under the fair value method and the Black-Scholes Option Pricing model was used to estimate the fair value of options granted. For the nine months ended September 30, 2012 and 2011, compensation costs recognized were NT$25,931 thousand and NT$57,820 thousand, respectively. Assumptions used in calculating the fair value are disclosed as follows:

Employee Stock Option Expected dividend yield 3.13%~6.63% Expected volatility 34.41%~50.06% Risk free interest rate 0.93%~2.53% Expected life 6.5 years

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The respective information of the units and weighted average exercise prices for stock option plans of MTK is disclosed as follows: For the nine months ended September 30, 2012 2011 Weighted-average Weighted-average Options Exercise Price per Options Exercise Price Employee Stock Option (Unit) Share (NTD) (Unit) per Share (NTD) Outstanding at beginning of period 5,198,793 $359.6 4,327,687 $416.0 Granted 1,346,795 286.8 2,109,871 280.0 Exercised - - (9,062) 371.0 Forfeited (Expired) (437,574) 336.5 (1,028,835) 412.0 Outstanding at end of period 6,108,014 332.9 5,399,661 363.0 Exercisable at end of period 1,951,053 1,091,626 Weighted-average fair value of options granted during the period (in NTD) $90.5 $56.5

The information regarding MTK’s outstanding stock options as of September 30, 2012 is disclosed as follows: Exercisable Stock Outstanding Stock Options Options Weighted- Weighted- Weighted- average average average Range of Expected Exercise Price Exercise Price Exercise Options Remaining per Share Options per Share Price (NTD) (Unit) Years (NTD) (Unit) (NTD) Stock option plan of 2007 $344.5~358.0 1,209,640 2.26 $364.9 1,209,640 $349.6 Stock option plan of 2009 431.0 742,600 3.38 460.6 450,062 431.0 Stock option plan of 2010 377.0~404.8 984,055 4.42 429.2 291,351 404.8 Stock option plan of 2011 277.4 1,843,550 5.42 280.0 - - Stock option plan of 2012 286.8 1,328,169 6.38 291.0 - -

6,108,014 $332.9 1,951,053

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b. MTK issued new shares to exchange 100% shares of Ralink Technology Corp. on October 1, 2011. According to the share-swap agreement, MTK also issued its own stock options to replace Ralink’s stock options. The original terms of Ralink’s options remain except for the changes: a) the underlying shares have been changed to MTK’s shares; and b) the number of shares each option can subscribe for has been changed according to the share exchange ratio stated in the share swap agreement.

Details of Ralink’s stock options to be replaced are shown below:

Total number Total number of Total Shares Exercise of options options outstanding Total number number of available for price Date of grant outstanding on translated by share of options options option (NTD) the shares exchange ratio on the outstanding granted holders (Note) exchange date shares exchange date 2006.06.30 91,000 1,575 499 - - $14.3 2006.09.30 599,500 9,763 3,092 - - 14.3 2006.12.31 78,000 3,936 1,247 - - 14.3 2007.03.31 273,000 11,967 3,791 - - 15.7 2007.06.30 150,000 32,879 10,416 9,419 9,419 15.7 2007.09.30 560,000 149,568 47,368 15,857 15,857 15.7 2007.12.30 17,000 944 299 - - 15.7 2007.12.31 1,000,000 277,490 87,895 37,432 37,432 16.7 Note: The exercise prices have been adjusted to reflect the change of outstanding shares (i.e. the share issued for cash or the appropriations of earnings) in accordance with the plan.

The Black-Scholes Option Pricing model was used to estimate the fair value of options granted to replace Ralink’s options. Assumptions used in calculating the fair value are disclosed as follows:

Employee Stock Option Expected dividend yield 6.57% Expected volatility 39.5% Risk free interest rate 0.71%~0.86% Expected life 0.75 year

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The weighted-average exercise price of the options granted to replace Ralink’s options is disclosed as follows:

For the nine months ended September 30, 2012 Weighted-average Options Exercise Price per Employee Stock Option (Unit) Share (NTD) Outstanding at beginning of period 144,735 $16.3 Granted - - Exercised (82,027) 16.2 Forfeited (Expired) - - Outstanding at end of period 62,708 16.3 Exercisable at end of period 62,708 Weighted-average fair value of options granted during the period (in NTD) $-

Other information is disclosed as follows:

Outstanding Stock Options Exercisable Stock Options Weighted- Weighted- Weighted- Range of average average average Exercise Expected Exercise Price Exercise Price Authorized Price Options Remaining per Share Options per Share issue date (NTD) (Unit) Years (NTD) (Unit) (NTD) 2007.01.29 15.7 25,276 0.03 15.7 25,276 15.7 2007.10.30 16.7 37,432 0.08 16.7 37,432 16.7 62,708 $16.3 62,708

=

(24) Earnings Distribution and Dividends Distribution Policy According to MTK's Articles of Incorporation, current year's earnings, if any, shall be distributed in the following order: a. Income tax obligation; b. Offsetting accumulated deficits, if any; c. Legal reserve at 10% of net income after tax; where such legal reserve amounts to the total authorized capital, this provision shall not apply. d. Special reserve in compliance with the Company Law or the Securities and Exchange Law; e. Remuneration for directors and supervisors to a maximum of 0.5% of the remaining current year’s earnings after deducting item (a) through (d). Remuneration for directors and supervisors’ services is limited to cash payments.

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f. The remaining after all above appropriations and distributions, combining with undistributed earnings from prior years, shall be fully for shareholders’ dividends and employees’ bonuses and may be retained or distributed proportionally. The portion of employees’ bonuses may not be less than 1% of total earnings resolved to distribute for shareholders’ dividends and employees’ bonuses. Employees’ bonuses may be distributed in the form of shares or cash, or a combination of both. Employees of MTK’s subsidiaries, meeting certain requirements determined by the board of directors, are also eligible for the employee stock bonus.

Shareholders’ dividends may be distributed in the form of shares or cash, or a combination of both, and cash dividends to be distributed may not be less than 10% of total dividends to be distributed.

According to the regulations of Taiwan SFC, MTK is required to appropriate a special reserve in the amount equal to the sum of debit elements under shareholders’ equity, such as unrealized loss on financial instruments and negative cumulative translation adjustment, at every year-end. Such special reserve is prohibited from distribution. However, if any of the debit elements is reversed, the special reserve in the amount equal to the reversal may be released for earnings distribution or making up for losses.

During the nine months ended September 30, 2012 and 2011, the amounts of the employee’ bonuses were estimated to be NT$1,277,867 thousand and NT$1,373,306 thousand, respectively. During the nine months ended September 30, 2012 and 2011, the amounts of remunerations to directors and supervisors were estimated to be NT$16,268 thousand and NT$24,595 thousand, respectively. Employee bonuses were estimated based on a specific rate of net income for the nine months ended September 30, 2012 and 2011 (excluding the impact of employees’ bonuses) while remunerations to directors and supervisors were estimated based on MTK’s Articles of Incorporation. Estimated amount of employee bonuses and remunerations paid to directors and supervisors were charged to current income. If stock bonuses are resolved for distribution to employees, the number of shares distributed is determined by dividing the amount of bonuses by the closing price (after considering the effect of cash and stock dividends) of the shares on the day preceding the shareholders’ meeting. If the resolution of shareholders’ general meeting modifies the estimates significantly in the subsequent year, MTK shall recognize the change as an adjustment to income of next year.

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The appropriations of earnings for 2011 and 2010 were resolved by the board of directors’ meeting on March 21, 2012 and March 16, 2011, while the appropriations of earnings for 2011 and 2010 were resolved by the shareholders’ general meeting on June 13, 2012 and June 15, 2011. The amounts resolved in the shareholders’ general meeting were consistent with those determined by the board of directors. The details of the distribution are as follows:

For the year ended December 31, 2011 2010 Directors’ and supervisors’ remuneration $28,497 $48,045 Employee bonus-cash $1,714,243 $3,863,296 Cash dividend $10,328,124 $21,999,457

The difference between the resolution of the shareholders’ general meeting and the estimated expense of the directors’ and supervisors’ remuneration and the employee bonus for 2011 is as follows:

The amount Difference resolved by the reasons and shareholders＇ Expense the accounting Appropriations general meeting estimated Difference treatment Employee bonus-cash $1,714,243 $1,714,243 $- - Directors’ and supervisors’ remuneration $28,497 $24,687 $3,810 (Note) Note: The difference would be considered as changes in accounting estimate and would be included in the profit or loss in 2012.

The information about the appropriations of earnings which were resolved by the board of directors’ meeting and the shareholders’ meeting is available at the Market Observation Post System website.

(25) Treasury Stock a. The Company purchases its own shares as treasury stock form Taiwan Stock Exchange. Changes in treasury stock during the nine months ended September 30, 2012 and 2011 is as follows: (a) (i) For the nine months ended September 30, 2012 None

- 27 - WorldReginfo - bb955748-22df-4c84-bf69-2c98116249bb English Translation of Financial Statements Originally Issued in Chinese MEDIATEK INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(ii) For the nine months ended September 30, 2011 (In thousands of shares) Purpose January 1, 2011 Increase Decrease September 30, 2011 For the shareholder’s

interest - 8,000 - 8,000

(b) According to the Securities and Exchange Law of R.O.C., the total shares of treasury stock shall not exceed 10% of MTK’s issued stock, and the total purchase amount shall not exceed the sum of retained earnings, additional paid-in capital and realized additional paid-in capital. As such, the maximum number of shares of treasury stock that the Company could hold as of September 30, 2011 was 109,998 thousand shares, while the amount of ceiling was NT$88,272,390 thousand.

(c) In compliance with Securities and Exchange Law of R.O.C., treasury stock should not be pledged, nor should it be entitled to voting rights or receiving dividends. Stock held by subsidiaries is treated as treasury stock. These subsidiaries have the same rights as other stockholders except for subscription to new stock issuance and voting rights.

b. MTK’s shares owned by the subsidiary are accounted for as treasury stock. Movement schedule of MTK’s treasury stock is as follows: January 1, 2012 Additions Disposal September 30, 2012 Owner Shares Amount Shares Amount Shares Amount Price Shares Amount Market Value MediaTek Capital Corp. 7,794,085 $55,970 - $- - $- $- 7,794,085 $55,970 $2,412,269

January 1, 2011 Additions Disposal September 30, 2011 Owner Shares Amount Shares Amount Shares Amount Price Shares Amount Market Value MediaTek Capital Corp. 7,794,085 $55,970 - $- - $- $- 7,794,085 $55,970 $2,560,357

(26) Net Operating Revenue For the nine months ended September 2012 2011 Revenues from sales of multimedia and cell phone chipsets $81,016,575 $67,650,864 Other operating revenue 449,014 358,334 Subtotal 81,465,589 68,009,198 Less: Sales returns (32,064) (40,297) Sales discounts (8,907,374) (3,744,184) Net Sales $72,526,151 $64,224,717

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(27) Earnings Per Share MTK’s capital structure is classified as complex capital structure after the issuance of employee stock options. Basic earnings per share and dilutive earnings per share are disclosed as follows: Amount (Numerator) Earnings per share Shares Before tax After tax (Denominator) Before tax After tax For the nine months ended September 30, 2012 Consolidated net income attributable to the parent Basic EPS Net income $11,630,527 $10,798,322 1,173,662,349 $9.91 $9.20 Effect of dilutive potential common shares: Bonus to employees - - 8,423,374 Stock option to employees - - 128,680 Diluted EPS $11,630,527 $10,798,322 1,182,214,403 $9.84 $9.13

Amount (Numerator) Earnings per share Shares Before Before tax After tax (Denominator) tax After tax Consolidated net income attributable to minority interests Basic EPS Net income $(21,980) $(21,980) 1,173,662,349 $(0.02) $(0.02) Effect of dilutive potential common shares: Bonus to employees - - 8,423,374 Stock option to employees - - 128,680 Diluted EPS $(21,980) $(21,980) 1,182,214,403 $(0.02) $(0.02)

Amount (Numerator) Earnings per share Shares Before tax After tax (Denominator) Before tax After tax For the nine months ended September 30, 2011 Consolidated net income attributable to the parent Basic EPS Net income $11,095,227 $10,705,568 1,090,772,918 $10.17 $9.81 Effect of dilutive potential common shares: Bonus to employees - - 12,290,741 Stock option to employees - - 40,144 Diluted EPS $11,095,227 $10,705,568 1,103,103,803 $10.06 $9.71 (To be Continued)

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(Continued) Amount (Numerator) Earnings per share Shares Before Before tax After tax (Denominator) tax After tax Consolidated net income attributable to minority interests Basic EPS Net income $(6,304) $(6,304) 1,090,772,918 $(0.01) $(0.01) Effect of dilutive potential common shares: Bonus to employees - - 12,290,741 Stock option to employees - - 40,144 Diluted EPS $(6,304) $(6,304) 1,103,103,803 $(0.01) $(0.01)

4. Related Party Transactions (1) Related parties and relations Related parties Relations King Yuan Electronics Co., Ltd. (“King Yuan”) The chairman of MTK and the chairman of King Yuan are close relatives Airoha Technology Corp. (“Airoha”) Equity investee ALi Corporation (“ALi”) Equity investee (Note) JMicron Technology Corporation (“JMicron”) MTK’s chairman doubles as JMicron’s chairman Andes Technologies, Inc. (“Andes”) MTK’s chairman doubles as Andes’s chairman Note: Information disclosed herein includes only those transactions with ALi occurred before May 7, 2012, the day the Company partly disposed of shares of ALi and ceased using the equity method.

(2) Major transactions with related parties a. Sales For the nine months ended September 30, 2012 2011 % of net % of net Amount sales Amount sales ALi $- - $73,248 0.11 Other 874 - - - Total $874 - $73,248 0.11

For the nine months ended September 30, 2011, the trade credit terms for related parties and third-party customers were both 45 to 60 days. Third-party customers may prepay their accounts in advance. The Company’s sales to ALi were royalty revenues, which were charged based on the royalty agreement with ALi.

b. IC testing, experimental services, manufacturing technology services For the nine months ended September 30, Transactions 2012 2011 King Yuan IC testing, experimental services, and manufacturing technology service $3,643,689 $3,541,552

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c. Rental income and related other receivables Rental Income Other Receivables For the nine months ended September 30, As of September 30, 2012 2011 2012 2011 JMicron $6,569 $4,573 $1,189 $389 Andes 29 - - - Total $6,598 $4,573 $1,189 $389

NT$876 thousand was received from JMicron, which was accounted for as deposits received due to a lease of office space.

(3) Receivables and payables resulted from the above transactions Payables to related parties As of September 30, 2012 2011 Amount % Amount % King Yuan $1,209,523 10.03 $1,190,074 17.45

5. Assets Pledged As Collateral (1) As of September 30, 2012 Party to which assets Amount was pledged Purpose of pledge Restricted deposits-current $6,917 Administrative Land lease guarantee Bureau of HSIP Restricted deposits-current 3,067 Customs Office Tariff execution deposits Restricted deposits-current 3,037 Danske Bank Credit guarantee Restricted deposits-current 7,000 Taiwan Cooperative Pledged for L/C Bank Restricted deposits-noncurrent 69 Customs Office Tariff execution deposits Restricted deposits-noncurrent 583 Citibank Tariff execution deposits Total $20,673

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(2) As of September 30, 2011 Party to which assets Amount was pledged Purpose of pledge Restricted deposits-current $6,917 Administrative Land lease guarantee Bureau of HSIP Restricted deposits-current 3,030 Customs Office Tariff execution deposits Restricted deposits-current 3,275 Danske Bank Credit guarantee Restricted deposits-noncurrent 78 Customs Office Tariff execution deposits Restricted deposits-noncurrent 652 Citibank Tariff execution deposits Total $13,952

6. Commitments and Contingencies (1) Lawsuit: a. Rambus Inc.(“Rambus”) filed a complaint against 26 companies on December 1, 2010 in the U.S. International Trade Commission, alleging infringement of United States Patents Nos. 6,470,405, 6,591,353, 7,287,109, 7,602,857, 7,602,858 and 7,715,494. Specifically, Rambus alleged that MTK’s DVD and DTV chips infringe two of the abovementioned patents (U.S. Patent Nos. 6,591,353 and 7,287,109).

In addition, Rambus filed a complaint against MTK and other defendants on December 1, 2010 in the United States District Court for the Northern District of California, alleging that MTK’s DVD chips, DTV chips and CD-ROM chips infringe United States Patent Nos. 6,034,918, 6,038,195, 6,260,097, 6,304,937, 6,426,916, 6,584,037, 6,715,020, 6,751,696, 7,209,997, 6,591,353 and 7,287,109.

U.S. International Trade Commission issued an Initial Determination on March 2, 2012 that found no violation of Section 337 of the Tariff Act by MTK’s products.

MTK and Rambus entered into a settlement and patent license agreement to settle all pending patent litigations and to dismiss all proceedings pending against each other including the above referenced litigations on March 5, 2012. The agreement grants MTK the option to use Rambus’ patented innovations in a broad range of MTK’s products.

b. Freescale Semiconductor, Inc.(“Freescale”) filed a complaint with the U.S. International Trade Commission against MTK and two other Respondents on June 8, 2011 alleging infringement of United States Patents No. 5,467,455. Freescale alleged that MTK’s DTV chips infringe its patent and sought to prevent the accused products from being imported into the United States.

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U.S. International Trade Commission issued an Initial Determination for the above referenced matter on July 12, 2012 that found no violation of Section 337 of the Tariff Act by MTK’s products, Freescale failed to establish the domestic industry element, Freescale’s asserted patent claims are invalid, and MTK’s products do not infringe the asserted patent claims. On September 12, 2012, the U.S. International Trade Commission issued a Notice of its affirmation of all of the findings listed above and the termination this investigation.

Freescale also filed a complaint in the United States District Court for the Western District of Texas against MTK and one other defendant on June 8, 2011, alleging infringement of United States Patent No. 5,467,455. Freescale alleged that MTK’s DTV chips infringe its patent and sought damages and an injunction to prevent the accused products from being sold in the future.

MTK filed a complaint in the United States District Court for the Northern District of California against Freescale on November 3, 2011 alleging infringement of United States Patent Nos. 6,738,845, 6,088,753, 6,311,244, and 6,889,331. MTK alleged that Freescale’s multimedia application processors and micro-controller products infringe the above referenced patents, and sought damages and an injunction to prevent the accused products from being sold in the future.

Freescale filed a complaint in the U.S. International Trade Commission against MTK and thirteen other Respondents on November 30, 2011 alleging infringement of United States Patent No. 5,467,455. Freescale alleged that MTK’s DTV chips infringe its patent and sought to prevent the accused products from being imported into the United States.

Additionally, Freescale filed a complaint in the United States District Court for the Western District of Texas against MTK on July 6, 2012 alleging infringement of United States Patent Nos. 6,920,316, 5,825,640, 5,943,274. Freescale alleged that MTK’s DTV chips infringe its patents and sought damages and an injunction to prevent the accused products from being sold in the future. c. LSI Corporation (“LSI”) and Agere Systems Inc. (“Agere”) filed a complaint with the U.S. International Trade Commission against ten respondents on March 12, 2012 alleging infringement of United States Patent Nos. 5,870,087, 6,452,958, 6,707,867, and 6,982,663, and seeking to prevent the accused products from being imported into the United States. Specifically, LSI and Agere asserted that the DVD/Blu-ray Player and DTV chips of MTK and its subsidiaries MediaTek USA Inc. and MediaTek Wireless, Inc. (USA), infringe the foregoing patents. In addition, LSI and Agere asserted that the Wi-Fi chips of subsidiaries Ralink Technology Corp. and Ralink Technology Corp. (USA) also infringed some of the aforementioned patents.

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d. Lantiq Deutschland GMBH (“Lantiq”) filed a complaint alleging patent infringement against TrendChip Technologies Corp.’s customer, Billion Electric Co. Ltd. (“Billion”) in 2010 in Germany. Trendchip Technologies Corp. was later merged into Ralink Technology Corporation (“Ralink”), which is now a wholly-owned subsidiary of MTK. Since Lantiq’s patent infringement allegation is related to Ralink’s DSL products, Ralink is assisting Billion in the above referenced matter. In addition, Ralink filed a patent nullity suit against Lantiq in the Federal Patent Court of Germany to invalidate the asserted patent. Ralink also filed a complaint in Wisconsin, USA against Lantiq on November 8, 2010 alleging infringement of United States Patent No. 5,394,116. Lantiq and Lantiq North America, Inc. later filed a complaint in the United States District Court for the Northern District of California against Ralink and Ralink Technology Corp. (USA) in January 2011, alleging infringement of United States Patent Nos. 6,351,799 and 7,061,904. Lantiq alleged patent infringement by Ralink’s networking and computing chips and asked the court to declare non-infringement and invalidity of the United States Patent No. 5,394,116. The Wisconsin case was transferred to United States District Court for the Northern District of California in March 2011. These two cases have been consolidated per the court’s order. On May 2, 2012, Lantiq added MTK and its subsidiaries MediaTek USA Inc. and MediaTek Wireless, Inc. (USA) as co-defendants. The operations of MTK and subsidiary Ralink would not be materially affected by those patent litigations. e. MOSAID Technologies Inc. filed a complaint in the United States District Court for the Eastern District of Texas against Ralink and other defendants in March 2011 alleging infringement of United States Patent Nos. 5,131,006, 5,151,920, 5,422,887, 5,706,428, 6,563,786, and 6,992,972. The operations of Ralink would not be materially affected by those patent litigations.

f. Azure Networks, LLC and Tri-County Excelsior Foundation filed a complaint in the United States District Court for the Eastern District of Taxes against subsidiaries Ralink and Ralink Technology Corporation (USA), along with other defendants in March 2011 alleging infringement of United States Patent No. 7,756,129. On April 6, 2012, Azure Networks, LLC and Tri-County Excelsior Foundation filed a complaint in the United States District Court for the Eastern District of Texas against MTK alleging infringement of the same patent referenced above. The operations of MTK and subsidiaries Ralink and Ralink Technology Corporation (USA) would not be materially affected by those patent litigations.

g. Commonwealth Scientific and Industrial Research Organization filed a complaint in the United States District Court for the Eastern District of Texas against MTK and subsidiaries MediaTek USA Inc., Ralink, and Ralink Technology Corporation (USA), along with other defendants on August 27, 2012 alleging infringement of United States Patent No. 5,487,069. The operations of MTK and subsidiaries MediaTek USA Inc., Ralink, and Ralink Technology Corporation (USA) would not be materially affected by this case.

The Company will handle these cases carefully.

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(2) Operating Lease: a. MTK has entered into lease agreements for land with the Administrative Bureau of HSIP for its need of operations. Related rent to be incurred in the future is as follows: Lease Period Amount 2012.10.01~2013.09.30 $30,371 2013.10.01~2014.09.30 30,371 2014.10.01~2015.09.30 30,371 2015.10.01~2016.09.30 30,371 2016.10.01~2017.09.30 30,371 2017.10.01~2027.12.31 191,270 Total $343,125

b. The subsidiaries have entered into office lease agreements for operations. Related rent to be incurred in the future would be as follows: Lease Period Amount 2012.10.01~2013.09.30 $123,720 2013.10.01~2014.09.30 109,793 2014.10.01~2015.09.30 106,288 2015.10.01~2016.09.30 67,197 2016.10.01~2017.09.30 47,374 2017.10.01~2020.12.31 101,770 Total $556,142

7. Significant Casualty Loss None

8. Significant Subsequent Events In order to enhance the operating performance and competitiveness, the board of directors approved a tender offer to acquire shares of MStar Semiconductor, Inc. (“MStar”) on June 22, 2012, and MTK plans to merge MStar after the tender offer. The terms of the tender offer was 1 MStar share in exchange for 0.794 MTK share plus NT$1 in cash. MTK totally acquired 254,115,685 shares (48% of MStar’s outstanding shares) of MStar. Totally 201,767,854 new shares were issued and NT$254,116 thousand was paid as the considerations.

A merger agreement was approved by the special shareholders’ meeting of both companies on October 12, 2012. After the merger, MStar will be fully merged into MTK, and the name of the surviving company will be “MediaTek Inc.” Based on the resolution of the special shareholders’ meeting, MTK expects to issue 218,581,841 new shares and pay NT$275,292 thousand in cash to acquire the remaining 52% shares of MStar. The number of shares to be issued and the amount of cash to be paid were subsequently adjusted to be 221,123,877 shares and NT$278,494 thousand, based on MTK’s board resolution dated October 29, 2012. The tentative effective merger date is January 1, 2013, subject to approvals from the relevant legal and regulatory authorities.

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9. Others (1) Financial Instruments a. Fair value of financial instruments As of September 30, 2012 2011 Carrying Carrying value Fair value value Fair value Non-derivative Assets Cash and cash equivalents $ 85,145,850 $ 85,145,850 $72,965,343 $72,965,343 Financial assets designated as at fair value through profit or loss $2,118,412 $2,118,412 $3,609,871 $3,609,871 Receivables $8,216,424 $8,216,424 $8,383,728 $8,383,728 Other receivables $4,362,381 $4,362,381 $2,465,780 $2,465,780 Available-for-sale financial assets $7,197,057 $7,197,057 $4,304,750 $4,304,750 Held-to-maturity financial assets $1,125,077 $1,131,936 $254,164 $257,208 Financial assets carried at cost $2,714,857 $- $1,998,261 $- Bond portfolios with no active market $1,000,000 $1,032,735 $1,000,000 $1,090,830 Investments accounted for using the equity method -with market value $57,092,495 $59,844,244 $1,358,176 $2,208,236 -without market value $599,051 $- $405,918 $- Refundable deposits $225,804 $225,804 $267,192 $267,192 Restricted assets $20,673 $20,673 $13,952 $13,952 Liabilities Short-term loans $10,504,436 $10,504,436 $2,317,175 $2,317,175 Payables (including related parties) $12,054,126 $12,054,126 $6,817,994 $6,817,994 Accrued expenses $12,326,660 $12,326,660 $13,160,126 $13,160,126 Payables to contractors and equipment suppliers $48,515 $48,515 $-$- Other payables $38,916 $38,916 $- $- Long-term payables (including current portion) $148,177 $148,177 $-$- Deposits received $18,430 $18,430 $5,969 $5,969 Derivative Assets Held-for-trading financial assets -foreign exchange contracts $5,679 $5,679 $323 $323 -cross currency swap contracts $- $- $137,638 $137,638 Liabilities Held-for-trading financial liabilities -foreign exchange contracts $2,063 $2,063 $87,306 $87,306

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(a) The following methods and assumptions were used by the Company in estimating the fair value of financial instruments: (i) The fair values of the Company’s short-term financial instruments approximate their carrying values at the reporting date due to their short maturities. This method was applied to cash and cash equivalents, receivables, other receivables, short-term loans, payables (including related parties), accrued expenses, payables to contractors and equipment suppliers, other payables and long-term accounts payable (including current portion).

(ii) The fair values of the Company’s refundable deposits, deposits received and restricted assets approximate their carrying value because the Company predicts the future cash inflows or outflows will be of similar amounts to the carrying values.

(iii) The fair values of held-for-trading financial assets and available-for-sale financial assets were based on their quoted market prices, if available, at the reporting date. If market prices were impractical and not available, fair values are determined using valuation techniques.

(iv) Financial assets carried at cost represent holdings of equity securities of non-public companies and have no material influence or derivatives that are linked to and must be settled by delivery of those securities. As these equity securities are not traded in open market, the fair value is not available.

(v) The fair values of held-to-maturity financial assets were based on their quoted market prices, if available, at the reporting date. If market prices were impractical and not available, fair values are determined using valuation techniques. The discount rates used in the valuation techniques were estimated by the rate of return of similar financial assets.

(vi) The bond portfolios with no active market have no quoted price from active market but have fixed or determinable payments. Fair values are estimated using the discounted cash flow method.

(vii) The fair values of investments accounted for using the equity method were based on quoted market prices, if available, at the reporting date. If the quoted prices were impractical and not available, the Company did not provide the information of fair values.

(viii) The fair values of derivative financial instruments and financial assets designated as at fair value through profit or loss were based on their quoted market prices, if available, at the reporting date. If market prices were impractical and not available, fair values are determined using valuation techniques.

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(b) Gains (losses) recognized for the changes in fair values of financial assets estimated using valuation techniques were NT$47,650 thousand and NT$(15,529) thousand for the nine months ended September 30, 2012 and 2011, respectively.

(c) As of September 30, 2012 and 2011, financial assets exposed to fair value risk from fixed interest rate were NT$72,108,100 thousand and NT$64,734,926 thousand, respectively, and financial liabilities exposed to fair value risk from fixed interest rate were NT$10,652,613 thousand and NT$2,317,175 thousand, respectively. As of September 30, 2012 and 2011, financial assets exposed to cash flow risk from variable interest rate were NT$2,933,804 thousand and NT$4,123,139 thousand, respectively, and financial liabilities exposed to cash flow risk from variable interest rate were nil.

(d) Interest income recognized from financial assets that were not at fair value through profit or loss amounted to NT$1,292,550 thousand and NT$585,355 thousand for the nine months ended September 30, 2012 and 2011, respectively. Interest expense recognized from financial liabilities that were not at fair value through profit or loss amounted to NT$83,931 thousand and NT$1,925 thousand for the nine months ended September 30, 2012 and 2011, respectively. The Company recognized an unrealized gain (loss) of NT$701,341 thousand and NT$(75,164) thousand in shareholder’s equity for the changes in fair value of available-for-sale financial assets for the nine months ended September 30, 2012 and 2011, respectively, and the amounts that were recycled from equity to gain (loss) were NT$4,565 thousand and NT$(13,065) thousand for the nine months ended September 30, 2012 and 2011, respectively. The Company also recognized an unrealized gain (loss) of NT$394,119 thousand and NT$(319,732) thousand in shareholders’ equity for the changes in available-for-sale financial assets held by its investee companies accounted for using the equity method for the nine months ended September 30, 2012 and 2011, respectively.

(e) Impairment losses recognized from financial assets were NT$173,824 thousand and nil for the nine months ended September 30, 2012 and 2011, respectively. b. (a) Risk management policy and hedge strategy for financial instruments The Company held certain non-derivative financial instruments, including cash and cash equivalents, short-term loans, available-for-sale financial assets-mutual fund, government bonds, corporate bonds and financial debentures. The Company held the financial instruments to meet operating cash needs. The Company also held other financial instruments such as receivables, payables, financial assets designated as at fair value through profit or loss, held-to-maturity financial assets, financial assets carried at cost, bond portfolios with no active market and investments accounted for using the equity method.

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The Company entered into forward exchange contract. The contracts were used to hedge assets and liabilities denominated in foreign currency. However, as these derivatives did not meet the criteria for hedge accounting, they were recognized as held-for-trading financial assets and liabilities-current.

(b) Information of financial risks The Company manages its exposure to key financial risks, including market risk, credit risk, liquidity risk and cash flow risk from variable interest rate in accordance with the Company’s financial risk management policy. The management policy was summarized as follows:

Market risk Market risk mainly includes currency risk. It comes from purchase or sale activities which are not denominated in the Company’s functional currency. The Company reviews its assets and liabilities denominated in foreign currency and enters into forward exchange contracts to hedge the exposure from exchange rate fluctuations. The level of hedging depends on the foreign currency requirements from each operating unit. As the purpose of holding forward exchange contracts is to hedge exchange rate fluctuation risk, the gain or loss made on the contracts from the fluctuation in exchange rates are expected to mostly offset gains or losses made on the hedged item. Had the USD moved against NTD by increasing 1 cent, the fair value of the forward exchange contracts would decrease by NT$820 thousand and NT$1,100 thousand as of September 30, 2012 and 2011, respectively. Credit-linked deposits and interest rate-linked deposits are affected by interest rates. When interest rate increases, the market value may decrease and may even be below the initial investment cost, and vice versa. The fair value of exchange rate-linked deposits is affected by interest rate fluctuation. The fair value of mutual fund, corporate bonds, government bonds and financial debentures will be exposed to fluctuations from other market factors as well as movement in interest rates.

Credit risk The Company’s exposure to credit risk arises from potential default of the counter-party or other third-party. The level of exposure depends on several factors including concentrations of credit risk, components of credit risk, the price of contract and other receivables of financial instruments. Since the counter-party or third-party to the foregoing forward exchange contracts are all reputable financial institutions, management believes that the Company’s exposure to default by those parties is minimal. The Company’s credit risk mainly comes from the collectibility of accounts receivable while receivable balances are monitored on an ongoing basis and an allowance for doubtful receivables is provided. Thus, the net book values of accounts receivable are properly evaluated and reflect the credit risk the Company exposes to. Financial instruments with positive fair values at the balance sheet date are evaluated for credit risk, which arises when the counter-party or the third-party to a financial instrument fails to discharge an obligation and the Company suffers a financial loss as a result.

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Credit risk of credit-linked deposits, interest rate-linked deposits and convertible bonds arises if the issuing banks breached the contracts or the debt issuer could not pay off the debts; the maximum exposure is the carrying value of those financial instruments. Therefore, the Company minimized the credit risk by only transacting with counter-party who is reputable, transparent and in good financial standing.

Liquidity risk The Company has sufficient operating capital to meet cash needs upon settlement of derivatives financial instruments. Therefore, the liquidity risk is low.

Except for financial assets carried at cost, bond portfolios with no active market and part of investments accounted for using the equity method that may have significant liquidity risks resulted from lack of an active market, the equity securities, bonds and funds held by the Company are traded in active markets and can be sold promptly at the prices close to their fair values. Since the exchange rates of forward exchange contracts are fixed at the time the contracts are entered into and the Company does hold and anticipates to hold sufficient financial assets denominated in USD, no significant additional cash requirement is anticipated.

The liquidity risk for structured investments arises when the Company decides to have the instrument redeemed or called prior to its maturity, which must be at the market prices determined by the issuing bank; therefore the Company is exposed to potential liquidity risk. The Company minimizes such risk by prudential evaluation when entering into such contracts.

Cash flow risk from variable interest rate The Company’s main financial instruments exposed to cash flow risk are the investments in time deposits with variable interest rates. However, since the duration of the time deposit is short, the fluctuation in interest rates has no significant impact. As such the cash flow risk is minimal.

(2) Business combinations a. In order to enhance the operating performance and competitiveness, MTK issued new shares to exchange 100% shares of Ralink Technology Corp. (“Ralink”). The record date of shares exchange was set on October 1, 2011. After the shares exchange, Ralink became 100%-owned by MTK. The business combination was resolved by shareholders’ general meetings of both companies on June 15, 2011. An exchange ratio, which has taken into account both companies’ profitability, market prices, technology and future development, has been set at 3.156 shares in exchange for one share of MTK. The business combination has been approved by the government. In accordance with the R.O.C. SFAS No. 25, “Business Combinations - Accounting Treatment under Purchased Method”, the Company discloses the following information:

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(a) Background of the acquired company: Ralink Technology Corp. was incorporated in 2001 and is a world leader in 802.11x technology. Ralink’s 802.11n Wi-Fi solutions are embedded in hundreds of products across all major Wi-Fi market segments including personal computers, broadband gateways, digital televisions, Blu-Ray players, web cameras, and IPTV set-top-boxes.

(b) The acquisition date, the percentage of ownership acquired and the adoption of the purchase method of accounting for the business combination: The acquisition date was set on October 1, 2011. MTK issued new shares to exchange 100% shares of Ralink Technology Corp. The acquisition was accounted for in accordance with the R.O.C. SFAS No. 25, “Business Combinations - Accounting Treatment under Purchased Method”. The acquisition information is as follows:

Item Amount Issuance of new shares due to the business combination $555,336 Add: Additional paid-in capital 12,259,039 Acquisition cost 12,814,375 Less: Fair value of the identifiable net assets of Ralink Technology Corp. (6,266,138) Goodwill $6,548,237

(c) Acquisition cost and the type, number of shares and amount of stock issued as a result of the acquisition: Totally 55,533,588 new shares (NT$12,814,375 thousand in the amount) of MTK were issued to acquire all Ralink’s shares.

(d) Contingent payments, options or commitments included in the acquisition agreement and the proposed accounting treatment: None

(e) Significant asset disposal decisions resulting from the business acquisition: None

(f) The income and expenses of Ralink since October 1, 2011 have been included in the Company’s income statement. Pro-forma information which assumes that the Company had merged Ralink since January 1, 2011 is disclosed as follows:

For the nine months ended September 30, 2011 Net sales $70,681,673 Net income attributable to the parent $9,966,782 Basic earnings per share (in NTD) $8.69

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b. The board of directors of MTK and the subsidiary Gaintech Co. Limited (“GCL”) resolved on April 10, 2012 to acquire 100% shares of Coresonic AB by USD35,000 thousand. Coresonic AB became a 100%-owned subsidiary of GCL, and was renamed MediaTek Sweden AB. The acquisition of MediaTek Sweden AB was accounted for in accordance with the R.O.C. SFAS No.25, “Business Combinations - Accounting Treatment under Purchased Method”. Since the allocation period of the acquisition price was not consummated as of September 30, 2012, the Company recorded the excess of acquisition cost over the net assets as goodwill temporarily in accordance with the R.O.C. SFAS No.25, “Business Combination - Accounting Treatment under Purchase Method”. The Company will allocate goodwill to related assets or liabilities when the allocation period of the acquisition price consummates.

Amount (US$’000) Acquisition cost 35,000 Less: Fair value of the identifiable net assets of MediaTek Sweden AB (2,870) Goodwill 32,130

(3) Other Information a. The significant financial assets and liabilities denominated in foreign currencies were as follows： As of September 30, 2012 2011 Foreign Foreign Currency Exchange NTD Currency Exchange NTD (thousand) rate (thousand) (thousand) rate (thousand) Financial assets Monetary item USD $2,344,036 $29.34 $68,778,733 $1,580,967 $30.44 $48,124,637

Non-monetary item USD $246,036 $29.34$7,291,184 $196,648 $30.44 $5,985,980 CNY $- $-$- $78,392 $4.77 $374,139

Investments accounted for using the equity method USD $1,958,438 $29.34 $57,464,474 $6,555 $30.44 $199,521

Financial liabilities Monetary item USD $856,536 $29.34$25,132,477 $347,324 $30.44 $10,572,532

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b. Inter-company relationships and significant inter-company transactions for the nine months ended September 30, 2012 are as follows: (For MTK’s shares owned by the subsidiary, please refer to the Note 3.(25) to the consolidated financial statements.)

Transaction No. Relationship Percentage of consolidated Company Name Counter Party (Note 1) (Note 2) Account Amount Terms operating revenue or total assets (Note 3) 1 Receivables from related parties $41,982 0.02% MediaTek Singapore Pte. Ltd. 1 Sales revenues $326,775 0.45% Based on contract 1 Other receivables $168 0.00% Rolltech Technology, Co. Ltd 1 Rent revenues $1,440 0.00% 0 MediaTek Inc. MediaTek Wireless, Inc. (USA) 1 Lease guarantee $64,170 0.03% MTK Wireless Limited (UK) 1 Lease guarantee $26,379 0.01% MediaTek China Limited 1 Bank financing guarantee $1,760,520 0.83% Gaintech Co. Limited 1 Bank financing guarantee $7,570,236 3.58% Ralink Technology Corp. 1 IP purchase guarantee $65,799 0.03% MediaTek Korea Inc. 3 Other receivables $10,923 0.01% 1 Gaintech Co. Limited MediaTek Singapore Pte. Ltd. 3 Other receivables $6,290,925 2.98% 3 Payables to related parties $55,228 0.03% MediaTek Wireless, Inc. (USA) 3 Research and development expenses $473,141 0.65% 3 Payables to related parties $7,726 0.00% 2 MediaTek Singapore Pte. Ltd. MediaTek Denmark ApS Based on contract 3 Research and development expenses $79,970 0.11% 3 Payables to related parties $28,699 0.01% MTK Wireless Limited (UK) 3 Research and development expenses $242,719 0.34% (To be continued)

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(Continued) Transaction No. Relationship Company Name Counter Party Percentage of consolidated (Note 1) (Note 2) Account Amount Terms operating revenue or total assets (Note 3) 3 Payables to related parties $147,130 0.07% MediaTek USA Inc. 3 Research and development expenses $1,065,131 1.47% 3 Payables to related parties $10,052 0.01% MediaTek Japan Inc. 3 Research and development expenses $161,748 0.22% 3 Payables to related parties $19,711 0.01% MediaTek India Technology Pvt. Ltd. 3 Research and development expenses $170,143 0.24% 3 Payables to related parties $18,671 0.01% MediaTek Korea Inc. 3 Research and development expenses $157,459 0.22% 3 Payables to related parties $1,002 0.00% 2 MediaTek Singapore Pte. Ltd MediaTek Wireless L.L.C. (Dubai) Based on contract 3 Selling expenses $7,111 0.01% 3 Prepayment $88,562 0.04% MediaTek (Shenzhen) Inc. 3 Research and development expenses $1,090,296 1.50% 3 Prepayment $75,595 0.04% MediaTek (Hefei) Inc. 3 Research and development expenses $577,751 0.80% 3 Prepayment $49,654 0.02% MediaTek (Beijing) Inc. 3 Research and development expenses $1,106,899 1.53% 3 Prepayments $7,491 0.00% Hesine Technologies, Inc. 3 Research and development expenses $51,136 0.07% (To be continued)

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(Continued) Transaction No. Relationship Percentage of consolidated Company Name Counter Party (Note 1) (Note 2) Account Amount Terms operating revenue or total assets (Note 3) 3 Prepayments $146,260 0.07% MediaTek (Suzhou) Inc. 3 Research and development expenses $41,304 0.06% 3 Prepayment $17,186 0.01% MediaTek (Chengdu) Inc. 3 Research and development expenses $344,465 0.48% 3 Prepayments $10,012 0.01% 2 MediaTek Singapore Pte. Ltd MediaTek (Wuhan) Inc. 3 Research and development expenses $112,848 0.16% 3 Prepayments $88,006 0.04% MediaTek (Shanghai) Inc. 3 Research and development expenses $129,871 0.18% 3 Prepayments $96,226Based on contract 0.05% MediaTek (Nanjing) Inc. 3 Research and development expenses $20,641 0.03% 3 Prepayments $7,992 0.00% MediaTek (Nanjing) Inc. 3 Research and development expenses $27,576 0.04% 3 Shadow Investment Limited 3 Prepayments $7,922 0.00% MediaTek (Suzhou) Inc. 3 Research and development expenses $27,576 0.04% Lepower Technologies 4 MediaTek (Beijing) Inc. 3 Research and development expenses $39,959 0.06% (Beijing) Inc. 5 MediaTek (Beijing) Inc. Vogins Technologie (Shanghai) Co., Ltd. 3 Research and development expenses $35,072 0.05%

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Inter-company relationships and significant inter-company transactions for the nine months ended September 30, 2011 are as follows: Relationship Transaction No. with the Percentage of consolidated Company Name Counter Party (Note 1) Company Account Amount Terms operating revenue or total assets (Note 2) (Note 3) Receivables from related parties $50,484 0.04% MediaTek Singapore Pte. Ltd. 1 Based on contract Sales revenues $435,434 0.68% 0 MediaTek Inc. MediaTek Wireless Inc. (USA) 1 Lease guarantee $85,134 0.07% MTK Wireless Limited (UK) 1 Lease guarantee $26,364 0.02% 1 Gaintech Co. Limited MediaTek Korea Inc. 3 Other receivables $11,332 0.01% 3 Payables to related parties $647,774 0.52% MediaTek Wireless, Inc. (USA) 3 Research and development expenses $754,152 1.17% 3 Payables to related parties $13,076 0.01% MediaTek Denmark ApS 3 Research and development expenses $172,006 0.27% 3 Payables to related parties $29,625 0.02% MTK Wireless Limited (UK) 3 Research and development expenses $277,341 0.43% 3 Payables to related parties $105,451 0.08% 2 MediaTek Singapore Pte. Ltd. MediaTek USA Inc. Based on contract 3 Research and development expenses $782,287 1.22% 3 Payables to related parties $20,261 0.02% MediaTek Japan Inc. 3 Research and development expenses $140,738 0.22% 3 Payables to related parties $25,714 0.02% MediaTek India Technology Pvt. Ltd. 3 Research and development expenses $194,389 0.30% 3 Payables to related parties $16,231 0.01% MediaTek Korea Inc. 3 Research and development expenses $119,653 0.19% (To be continued)

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(Continued) Relationship Transaction No. with the Percentage of consolidated Company Name Counter Party (Note 1) Company Account Amount Terms operating revenue or total assets (Note 2) (Note 3) 3 Payables to related parties $92,038 0.07% MediaTek (Shenzhen) Inc. 3 Research and development expenses $943,590 1.47% 3 Payables to related parties $83,126 0.07% MediaTek (Hefei) Inc. 3 Research and development expenses $462,863 0.72% 3 Prepayment $56,706 0.05% 2 MediaTek Singapore Pte. Ltd MediaTek (Beijing) Inc. Based on contract 3 Research and development expenses $1,125,062 1.75% 3 Prepayment $115,709 0.09% MediaTek (Chengdu) Inc. 3 Research and development expenses $24,937 0.04% 3 Prepayment $49,263 0.04% MediaTek (Shanghai) Inc. 3 Research and development expenses $12,456 0.02%

Note 1: MTK and subsidiaries are coded as follows: 1. MTK is coded “0”. 2. The subsidiaries are coded consecutively beginning from “1” in the order presented in the table above.

Note 2: Transactions are categorized as follows: 1. The holding company to subsidiary. 2. Subsidiary to holding company. 3. Subsidiary to subsidiary.

Note 3: The percentage with respect to the consolidated asset for transactions of balance sheet items is based on each item’s balance at period-end. The percentage with respect to the consolidated net sales for profit or loss items and cumulative balance is used as basis.

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10. Operating Segment Information The major sales of the Company come from multimedia and mobile phone chips and other integrated circuit design products. The chief operating decision maker reviews the overall operating results to make decisions about resources to be allocated to and evaluates the overall performance. Therefore, the Company is aggregated into a single segment.

11. IFRSs Adoption Information The Financial Supervisory Commission (“FSC”) requires companies with shares listed on the TSE or traded on the Taiwan GreTai Securities Market or Emerging Stock Market to prepare their financial statements in accordance with the International Financial Reporting Standards, International Accounting Standards, and Interpretations developed by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee as recognized by the FSC (collectively referred to as “IFRSs”), and the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, starting 2013. Under Rule No. 0990004943 issued by the FSC on February 2, 2010, the Company makes the following pre-disclosures on the adoption of IFRSs:

(1) The main contents of the plan to adopt IFRSs and the current status: The Company has set up a project team and made a plan to adopt IFRSs. Leading the implementation of this plan is MTK’s Chief Financial Officer, Mr. David Ku. The main contents of the plan, estimated completion schedule and status of execution as of September 30, 2012, were as follows:

Contents of Plan Responsible Department Status of Execution 1. Establish a project team Finance and Accounting Completed

2. Make a plan to adopt IFRSs Finance and Accounting Completed

3. Identify differences between the existing Finance and Accounting Completed accounting policies and IFRSs

4. Identify consolidated entities under IFRSs Finance and Accounting Completed

5. Select voluntary exemptions under IFRS 1 Finance and Accounting Completed “First-time Adoption of International Financial Reporting Standards” and assess the impact of these exemptions

6. Assess the adjustments required for IT Finance and Accounting Completed system and Information Technology

7. Assess the adjustments required for Finance and Accounting Completed internal controls and Internal Auditor

8. Finalize the accounting policies under Finance and Accounting Completed IFRSs

(To be continued)

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(Continued) Contents of Plan Responsible Department Status of Execution 9. Finalize the selection of voluntary Finance and Accounting Completed exemptions under IFRS 1 “First-time Adoption of International Financial Reporting Standards

10. Prepare opening IFRS statement of Finance and Accounting Completed financial position

11. Prepare IFRSs comparative information Finance and Accounting In progress for 2012

12. Finalize adjustments to the internal Finance and Accounting In progress control (including financial statements and Internal Auditor process and the associated IT system)

(2) Material differences between the existing accounting policies and the accounting policies to be adopted under IFRSs and the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and their impacts on the Company are described in the table below.

The Company assesses the material differences in accounting polices based on the IFRSs as recognized by the FSC and the Guidelines Governing the Preparation of Financial Reports by Securities Issuers expected to become effective in 2013. However these assessments may be changed as the FSC may recognize different versions of IFRSs or amend the Guidelines Governing the Preparation of Financial Reports by Securities Issuers in the future. Furthermore, the Company has decided the accounting policies to be adopted under IFRSs based on the current circumstances, should circumstances change in the future, the accounting policies to be adopted may change accordingly. The material differences in accounting policies described in the table below may not result in any adjustment on the date of transition to IFRSs, due to the voluntary exemptions selected under IFRS 1 “First-time Adoption of International Financial Reporting Standards”.

Accounting Issues Description of differences Under the requirements of the existing Guidelines Governing the Preparation of Financial Reports by Securities Issuer, equity investments in unlisted entities or entities traded on Emerging Stock market should be measured at cost. However under the requirements of IAS 39, only investments in equity instruments that do not have a quoted market price Financial assets in an active market and whose fair value cannot be reliably measured measured at cost could be measured at cost. The fair value of investments in equity instruments that do not have a quoted market price in an active market is reliably measurable if (a) the variability in the range of reasonable fair value estimates is not significant for that instrument or (b) the probabilities of the various estimates within the range can be reasonably assessed and used in estimating fair value. (To be continued)

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(Continued) Accounting Issues Description of differences ROC GAAP does not require an associate’s financial statements to be prepared using accounting policies that conform with those of the investor. Under the requirements of IAS 28, if an associate uses accounting policies other than those of the investor for like transactions and events in similar circumstances, adjustments shall be made to conform the associate’s accounting policies to those of the investor when the associate’s financial statements are used by the investor in applying the equity method. Investments Under the requirements of ROC GAAP, if an investee company issues accounted for using new shares and original shareholders do not purchase or acquire new the equity method shares proportionately, and consequently the investment percentage, and therefore the equity in net assets for the investment that an investor company has invested have changed, the resulting difference shall be accounted for as an equity transaction. However under IFRSs, if the investment percentage has decreased under the transaction described above, it should be accounted for as a disposal of interests in associate; if the investment percentage has increased, then it is accounted for as an acquisition of the investment in an associate. Under the requirements of ROC GAAP, minimum pension liability is to be recognized for the excess of the accumulated benefit obligation over the pension plan assets. There is no such requirement under IAS 19. Under the requirements of ROC GAAP, the unrecognized transitional net Employee benefits assets (or net benefit obligation) should be amortized on a straight-line basis over the average remaining service period of employees still in service and expected to receive benefits. There is no such requirement under IAS 19. Under the requirements of ROC GAAP, deferred tax assets are recognized in full. However, if it is more than 50% probable that the economic benefits of a deferred tax asset become unrealizable, a valuation allowance account should be established to reduce the carrying amount of the deferred tax asset. However under the requirements of IAS 12 “Income Taxes”, a deferred tax asset shall be recognized to the extent that it is probable that it would be utilized. Income taxes Under the requirements of ROC GAAP, a deferred tax asset or liability should be classified as current or noncurrent according to the classification of its related asset or liability. If a deferred tax asset or liability is not related to an asset or liability for financial reporting, it should be classified as current or noncurrent according to the expected reversal date of the temporary difference. However under the requirements of IAS 1 “Presentation of Financial Statements”, deferred tax assets or liabilities are classified as noncurrent. (To be continued)

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(Continued) Under the requirements of ROC GAAP, the current and noncurrent deferred tax liabilities and assets of the same taxable entity should be offset against each other and presented as a net amount. However under the requirements of IAS 12, an entity shall offset current tax assets and Income taxes current tax liabilities if, and only if, the entity has a legally enforceable right to offset the recognized amounts; and an entity shall offset deferred tax assets and current tax liabilities if the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on the same taxable entity.

(3) The preliminary assessment on the monetary impacts of the material differences between the existing accounting policies and the accounting policies to be adopted under IFRSs and the Guidelines Governing the Preparation of Financial Reports by Securities Issuers is as follows：

a. Reconciliation of the balance sheet as of January 1, 2012:

ROC GAAPAdjustments IFRSs Note Financial assets carried at cost-noncurrent $2,203,872 $(186,259) $2,017,613 (a) Investments accounted for using the equity method 1,834,664 146,319 1,980,983 (a) & (b) Deferred income tax assets-noncurrent - 269,382 269,382 (c) & (e) Prepaid pension costs 3,826 (3,826) - (c) Other assets 143,698,746 (220,940) 143,477,806 (e) Total assets 147,741,108 4,676 147,745,784 Accrued pension liabilities 190,538 254,541 445,079 (c) Deferred income tax liabilities-noncurrent 590,934 4,520 595,454 (c) & (e) Other liabilities 30,631,309 - 30,631,309 Total liabilities 31,412,781 259,061 31,671,842 Capital 11,475,191 - 11,475,191 Capital reserve 24,605,882 (117,473) 24,488,409 (a), (b) & (d) Retained earnings 82,463,225 (136,729) 82,326,496 (a), (b), (c) & (d) Cumulative translation adjustments (2,253,504) (183) (2,253,687) (a) Unrealized gain (loss) on financial instruments 43,192 - 43,192 Treasury stock (55,970) - (55,970) Minority interests 50,311 - 50,311 Shareholders’ equity 116,328,327 (254,385) 116,073,942

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(a) Under the requirement of IAS 28, NT$186,259 thousand of financial assets carried at cost-noncurrent was remeasured and reclassified to investments accounted for using the equity method in the amount of NT$147,883 thousand. Therefore, capital reserve, cumulative translation adjustments and retained earnings were increased (decreased) by NT$2,514 thousand, NT$(183) thousand and NT$(40,707) thousand, respectively.

(b) Investments accounted for using the equity method, capital reserve and retained earnings were (decreased) increased by NT$(1,564) thousand, NT$205 thousand and NT$(1,769) thousand for conforming to accounting policies.

(c) Under the requirement of ROC GAAP, the Company shall use actuarial assumptions to measure its defined benefit obligations and record relative pension costs and accrued pension liabilities. After the adoption of IFRSs, the Company shall use actuarial assumptions under the requirement of IAS 19 “Employee Benefits”. Under the requirements of IFRS 1, the Company remeasured its defined benefit obligations, adjusted its cumulative actuarial gains and losses to zero, and recognized all unrealized transitional net benefit obligations at the date of transition. After the transitional adjustments, the Company’s accrued pension liabilities, prepaid pension cost, deferred income tax assets-noncurrent, deferred income tax liabilities-noncurrent and retained earnings were increased (decreased) by NT$254,541 thousand, NT$(3,826) thousand, NT$43,272 thousand, NT$(650) thousand and NT$(214,445) thousand, respectively.

(d) Capital reserved-long-term investment transaction of NT$120,192 thousand was reclassified to retained earnings due to incompliance with IFRSs.

(e) The remaining adjustments were reclassifications to conform to the presentation under the requirements of IFRSs and did not affect shareholders’ equity. b. Reconciliation of the balance sheet as of September 30, 2012: ROC GAAPAdjustments IFRSs Note Financial assets carried at cost-noncurrent $2,714,857 $(186,259) $2,528,598 (a) Investments accounted for using the equity method 57,691,546 236,993 57,928,539 (a), (b) & (e) IPs and others 1,466,736 (114,747) 1,351,989 (g) Deferred income tax assets-noncurrent 257,157 311,256 568,413 (c), (d) & (i) Long-term prepaid rents - 114,747 114,747 (g) Prepaid pension costs 3,826 (3,826) - (c) Other assets 149,107,565 (255,963) 148,851,602 (i) Total assets 211,241,687 102,201 211,343,888 (To be continued)

- 52 - WorldReginfo - bb955748-22df-4c84-bf69-2c98116249bb English Translation of Financial Statements Originally Issued in Chinese MEDIATEK INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(Continued) ROC GAAPAdjustments IFRSs Note Accrued expenses 12,326,660 54,790 12,381,450 (d) Accrued pension liabilities 195,622 257,145 452,767 (c) Deferred income tax liabilities-noncurrent 1,098,929 34,059 1,132,988 (c), (f) & (i) Other liabilities 24,770,555 (5,027) 24,765,528 (i) Total liabilities 38,391,766 340,967 38,732,733 Capital 13,493,702 - 13,493,702 Capital reserve 79,496,975 (29,995) 79,466,980 (a), (b) & (h) (a), (b), (c), (d), (e), Retained earnings 82,933,422 151,976 83,085,398 (f) & (h) Cumulative translation adjustments (4,184,049) (218) (4,184,267) (a) Unrealized gain (loss) on financial instruments 1,134,087 (360,529) 773,558 (f) Treasury stock (55,970) - (55,970) Minority interests 31,754 - 31,754 Shareholders’ equity 172,849,921 (238,766) 172,611,155

(a) Under the requirement of IAS 28, NT$186,259 thousand of financial assets carried at cost-noncurrent was remeasured and reclassified to investments accounted for using the equity method in the amount of NT$138,727 thousand. Therefore, capital reserve, cumulative translation adjustments and retained earnings were increased (decreased) by NT$3,635 thousand, NT$(218) thousand and NT$(50,949) thousand, respectively.

(b) Investments accounted for using the equity method, capital reserve and retained earnings were (decreased) increased by NT$(1,043) thousand, NT$205 thousand and NT$(1,248) thousand for conforming to accounting policies.

(c) Under the requirement of ROC GAAP, the Company shall use actuarial assumptions to measure its defined benefit obligations and record relative pension costs and accrued pension liabilities. After the adoption of IFRSs, the Company shall use actuarial assumptions under the requirement of IAS 19 “Employee Benefits”. Under the requirement of IFRS 1, the Company remeasured its defined benefit obligations, adjusted its cumulative actuarial gains and losses to zero, and recognized all unrealized transitional net benefit obligations at the date of transition. After the transitional adjustments, the Company’s accrued pension liabilities, prepaid pension cost, deferred income tax assets-noncurrent, deferred income tax liabilities-noncurrent and retained earnings were increased (decreased) by NT$257,145 thousand, NT$(3,826) thousand, NT$43,714 thousand, NT$(650) thousand and NT$(216,607) thousand, respectively.

- 53 - WorldReginfo - bb955748-22df-4c84-bf69-2c98116249bb English Translation of Financial Statements Originally Issued in Chinese MEDIATEK INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(d) Under the requirement of IAS 19 “Employee Benefits”, the Company shall recognize unused accumulating compensated absences. Therefore, accrued expenses, deferred income tax assets and retained earnings were increased (decreased) by NT$54,790 thousand, NT$9,314 thousand and NT$(45,476) thousand, respectively.

(e) According to IFRSs, when the Company’s equity investment increases and the significant influence is obtained, the Company shall remeasure the entire equity investment at fair value. The Company’s investments accounted for using the equity method and retained earnings both increased by NT$99,309 thousand because of this requirement.

(f) Under IFRSs, when the Company partly disposes of an equity investment and loses its significant influence, the Company shall remeasure the remaining investment at fair value and recognize the difference between the book value of the entire investment and the fair value of the remaining investment plus the proceeds of the disposal as a gain or loss. The Company’s retained earnings, deferred income tax liabilities-noncurrent and unrealized gain (loss) on financial instruments increased (decreased) by NT$333,112 thousand, NT$27,417 thousand and NT$(360,529) thousand, respectively, due to this requirement.

(g) Under the requirement of IFRSs, the Company shall reclassify the right to the use of the land which was classified as an operating lease to long-term prepaid rent. Therefore, long-term prepaid rents and IPs and others were increased (decreased) by NT$114,747 thousand and NT$(114,747) thousand, respectively.

(h) Capital reserve-long-term investment transaction of NT$33,835 thousand was reclassified to retained earnings due to incompliance with IFRSs.

(i) The remaining adjustments were reclassifications to conform to the presentation under the requirement of IFRSs and did not affect shareholders’ equity. c. Reconciliation of the income statement for the nine months ended September 30, 2012:

ROC GAAPAdjustments IFRSs Note Net sales $72,526,151 $- $72,526,151 Cost of goods sold (42,562,056) (1,645) (42,563,701) (a) Gross profits 29,964,095 (1,645) 29,962,450 Operating expenses (21,004,854) (55,749) (21,060,603) (a) & (b) Operating income 8,959,241 (57,394) 8,901,847 Non-operating income/ (c), (d), (e) & gains or expenses/losses 2,649,306 363,760 3,013,066 (f) Income before income tax 11,608,547 306,366 11,914,913 Income tax expense (832,205) (17,661) (849,866) (a), (b) & (f) Net income 10,776,342 288,705 11,065,047

- 54 - WorldReginfo - bb955748-22df-4c84-bf69-2c98116249bb English Translation of Financial Statements Originally Issued in Chinese MEDIATEK INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(a) Under the requirement of IAS 19 “Employee Benefits”, the Company shall recognize unused accumulating compensated absences. Therefore, cost of goods sold, operating expenses and income tax expense were increased (decreased) by NT$1,645 thousand, NT$53,145 thousand and NT$(9,314) thousand, respectively.

(b) The Company shall use actuarial assumptions under the requirements of IAS 19 “Employee Benefits” to measure its defined benefit obligations. Therefore, operating expenses and income tax expenses were increased (decreased) by NT$2,604 thousand and NT$(442) thousand, respectively.

(c) Adjustment of gain on equity investments was increased by NT$521 thousand for conforming to group accounting policies.

(d) Under the requirement of IAS 28, the Company remeasured and reclassified financial assets carried at cost-noncurrent to investments accounted for using the equity method. Therefore, gain on equity investments was decreased by NT$10,242 thousand.

(e) According to IFRSs, when the Company’s equity investment increases and the significant influence is obtained, the Company shall remeasure the entire equity investment at fair value. The Company’s gain on disposal of investments was increased by NT$99,309 thousand because of this requirement.

(f) Under IFRSs, when the Company partly disposes of an equity investment and loses its significant influence, the Company shall remeasure the remaining investment at fair value and recognize the difference between the book value of the entire investment and the fair value of the remaining investment plus the proceeds of the disposal as a gain or loss. The Company’s gain on disposal of investments and income tax expense were increased by NT$274,172 thousand and NT$27,417 thousand, respectively. d. According to the requirements under IFRS 1, “First-time Adoption of International Financial Reporting Standards”, the Company prepares its first IFRS financial statements based on the effective IFRS standards and makes adjustments retrospectively, except for the optional exemptions and mandatory exemptions under IFRS 1. The optional exemptions selected by the Company is as follows:

(a) IFRS 3 “Business Combinations” has not been applied to acquisitions of subsidiaries and of interests in associates that occurred before January 1, 2012. Applying this exemption would result in the carrying amount of assets acquired and liabilities assumed in the business combination in accordance with previous GAAP to be their deemed costs in accordance with IFRSs as at the date of acquisition. Subsequent to the date of acquisition, the assets and liabilities would be measured in accordance with IFRSs. The carrying amount of goodwill in the opening IFRS Balance Sheet is its carrying amount in accordance with previous GAAP at December 31, 2011, after testing for impairments and adjusting for recognition or de-recognition of intangibles under IFRS 1.

- 55 - WorldReginfo - bb955748-22df-4c84-bf69-2c98116249bb English Translation of Financial Statements Originally Issued in Chinese MEDIATEK INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(b) The Company has recognized all cumulative actuarial gains and losses directly to retained earnings as of January 1, 2012.

(c) The Company has elected to disclose amounts required by paragraph 120A (p) of IAS19 prospectively from January 1, 2012.

(d) IFRS 2 has not been applied to equity instruments in share-based payment transactions that vested before January 1, 2012.

(e) The Company has applied the transitional provision in IFRIC 4 and has assessed all arrangements whether include lease transaction as of January 1, 2012.

(f) Under the requirement of IFRIC 1 “Changes in Existing Decommissioning, Restoration and Similar Liabilities”, changes in the liabilities of existing decommissioning, restoration and similar liabilities shall be added to, or deducted from, the cost of the related asset in the current period. The adjusted depreciable amount of the asset is depreciated over its useful life. The Company need not to comply with these requirements for changes in such liabilities that occurred before the date of transition to IFRSs.

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